Articles of association - PDF

1.1. The fund is called Lífeyrissjóður verzlunarmanna. The fund’s domicile and legal venue is in Reykjavík.

2.1. The fund's role is to ensure its members, their surviving spouses and children pension benefits in accordance with the rules laid down in these Articles.

2.2. The fund operates on the basis of the collective agreement between the Icelandic Confederation of Labour (ASÍ) and the Confederation of Icelandic Enterprise (SA) of 12 December 1995, and the agreement between ASÍ and SA of 24 April 2018, cf. the agreement between the Commercial Workers of 
Reykjavík (VR), SA and the Icelandic Federation of Trade (FA) of 23 April 2018.

2.3. The fund operates under the Act on Mandatory Pension Insurance and on the Activities of Pension Funds, No. 129/1997.

2.4. The fund places special emphasis on retirement pension benefits and reserves the right to prioritise protection of those rights when reviewing the entitlement provisions of these Articles.

3.1. The fund operates three divisions:

A Division, which is a mutual division. Statutory or contractual contributions are paid to A Division, cf. Articles 10.1 and 10.2; 
B Division, which is a private pension division. Supplementary pension contributions are paid to B Division, cf. Art. 10.3; and 
C Division, which collects private pension contributions, as provided for in Act No. 129/1997, referred to in these Articles as a specified private pension,.cf. Art. 10.3.

3.2. The following Articles apply only to A Division: Articles 8, 11 to 18, and 25.2; Art. 19 of the Articles of Association applies only to B Division; and Art. 20 applies only to C Division

4.1. Fund members shall be all employees who are members of VR covered by the union’s collective agreements with employers, unless otherwise specifically provided for in a wage agreement. Members of other commercial workers’ associations may be members of the fund. 

4.2. Furthermore, employees whose terms of employment are based on VR’s collective agreement are entitled and obliged to become members of the fund, if the agreement determines the minimum terms of employment for their employment sector or the terms of employment in the employee's contract are 
based on that agreement and the employee is not a mandatory member of another pension fund.

4.3. Membership shall commence from the first day of the following month after the employee reaches the age of 16 years.

4.4. Self-employed persons and individuals whose terms of employment are not based on a collective agreement may be members of the fund. 

4.5. The fund’s Board of Directors may, after obtaining the approval of its member organisations, grant entire groups of employees membership of the fund. An application for such membership must be made in writing.

4.6. The fund’s members are those persons who pay or have paid a contribution to the fund, as well as persons benefiting from a retirement or disability pension from the fund under Articles 12 and 13.

4.7. Fund membership is terminated if a fund member receives payment of their entitlement in a lump sum or if the entitlement is transferred according to pension fund rules to another pension fund

4.8. Fund members and other employees, and persons engaged in business operations or self-employed, may pay contributions to B Division of the fund as private pension savings, as provided for in Act No. 129/1997, and to C Division as a specified private pension.

5.1. The fund’s Board of Directors shall be composed of eight persons. Four directors shall be nominated by VR, three by SA and one shall be nominated by FA. Each of the fund’s above-mentioned member organisations shall also nominate one alternate director. 

5.2. The Board's term of office shall be until the fund’s next annual general meeting. Nominations to the fund’s Board of Directors shall be made as follows: VR nominates four directors, two of which are nominated every other year for a four-year term. SA nominates three directors, one or two each year for a two-year term, and FA nominates one director every other year for a two-year term. VR, on the one hand, and SA and FA on the other hand, shall each have nomination committees to examine the qualifications and eligibility of those individuals prepared to serve as directors of the pension fund, taking into consideration i.a. Art. 5.8 on general eligibility of directors. VR for its part and the employers’ associations for their part shall set working rules for their nomination committees.

Temporary provision: Initial nominations shall be carried out by having VR nominate two directors 
for four years and two for two years, SA shall nominate one director for two years and two for one year, and FA shall nominate one director for two years.

5.3. A director may resign before the end of their term, in which case the director shall send notification thereof to the fund’s Board of Directors and the organisation who nominated them. The nominating party may revoke a director’s nomination before the end of their term if the director is in breach of their duties as prescribed by law, these Articles of Association or other currently applicable rules. Grounds must be 
provided for revocation of nomination and it must be confirmed by representatives of the nominating party in question who are members of the fund's Council of Representatives and formally notified to the fund's Board. If a director resigns before the end of their term of office, the director’s alternate shall replace them until the organisation which nominated the director has nominated a new director to the Board as provided for in the applicable rules in these Articles. The new director shall remain until the end 
of the term of office of the outgoing director.

Council of Representatives– Appointment and role
5.4. The pension fund's member organisations shall operate a Council of Representatives for the pension fund, comprised of 50 delegates. VR appoints 25 representatives, SA 23 representatives and FA 2 representatives. Appointments to the Council of Representatives shall be made according to agreements of the fund's membership organisations and the relevant rules adopted by these organisations.

5.5. The pension fund’s member organisations shall notify the fund of the names of their current respective representatives. Any changes to appointed representatives shall also be notified. A list of the names of representatives and, as applicable, their alternates, who will attend the fund's annual general 
meeting shall be delivered to the Board of Directors of the fund no later than two weeks before each annual general meeting.

5.6. The Board of Directors of the pension fund shall convene the Council of Representatives twice yearly, once in the autumn and once prior to the annual general meeting. These meetings shall discuss issues of concern to the fund, including key figures on the fund's performance, the progress of its investment strategy and, as the case may be, preparations for amendments to its Articles of Association. The Board may convene the additional meetings of the Council of Representatives if occasion so warrants.

5.7. The role of the pension fund’s Council of Representatives shall be as follows:

5.7.1. Representatives of VR in the Council of Representatives shall approve directors nominated by VR, representatives of SA in the Council of Representatives shall approve directors who have been appointed by SA and representatives of FA in the Council of Representatives shall approve the director whom FA has appointed. Alternate directors shall be approved in the same manner. The fund's member organi-sations shall arrange meetings of their representatives to discuss approval of their nominated directors 
according to the rules which the respective nominating body has adopted concerning this. If an individual nominated by a nominating body is not approved by its representatives in the fund’s Council of Representatives, the nominating body shall nominate another person to serve as Director in 
accordance with the same rules.

5.7.2. Representatives in the Council of Representatives shall vote at the fund’s annual general meeting on behalf of their member organisations on the decisions listed in Art. 6. Each representative is authorised to cast votes of two other representatives in addition to their own vote. A simple majority shall 
determine the outcome of voting by the Council of Representatives unless otherwise required in these Articles. If so requested by four or more representatives, separate votes shall be held, with VR’s representatives casting their votes, on the one hand, and representatives of SA and FA together, on the 
other hand; in such case the approval of at least 13 representatives from each part of the Council of Representatives is required for lawful approval of a matter.

5.7.3. The Council of Representatives shall generally monitor the fund's activities, the work of the Board and provide restraint. The Council examines, for instance, the annual financial statements, investment policy and the fund's annual report.

General eligibility of Directors
5.8. The general eligibility of directors to serve on the Board of Directors of the pension fund is governed by applicable law at any given time, currently the first to fourth paragraphs of Article 31 of Act No. 129/1997, as subsequently amended.

5.8.1. In appointing their directors, the employers' organisations referred to in Art. 5.1 shall ensure an equal gender distribution. The same applies to directors appointed by VR.

5.8.2. The pension fund’s member organisations shall consult with each other to ensure that the fund’s Board of Directors as a whole possesses sufficient expertise and experience to fulfil its role.5.8.3. A director may serve a maximum of eight consecutive years, as a regular member of the Board of Directors. 

Role of the Board of Directors and division of responsibilities
5.9. The Board shall divide its tasks among the directors, however, ensuring that representatives of employers and of VR serve alternately as chairperson for two years at a time. The Board of Directors shall adopt working rules and keep a book of minutes, recording the discussion and actions at Board meetings, signed by those persons present at the meeting. A Board meeting has a quorum if at least five directors or alternates attend. In its work the Board of Directors shall have regard for Guidelines on Corporate Governance, as applicable to the pension fund’s activities (currently the 6th edition of Guidelines issued by the Iceland Chamber of Commerce, SA and NASDAQ Iceland). Directors shall 
perform their duties with integrity, be able to devote sufficient time as required of directors for board work and make independent decisions in each individual case.

5.10. The Board of Directors is the supreme authority in the pension fund’s affairs between annual general meetings. The Board of Directors of the fund shall promote the fund's successful operation and long-term performance. It is responsible for its activities and for ensuring that its organisation and 
activities are always sound and proper. It makes strategic decisions regarding the fund's situation and operations and ensures that its day-to-day operations, including accounting and management of the fund's financial assets, are adequately monitored. The fund’s Board of Directors establishes internal quality control and documented supervisory processes for the pension fund.

5.11. The fund’s Board shall hire the head of its Audit Division or reach agreement with an independent supervisory party to handle internal quality control. Furthermore, the Board of Directors submits a proposal to the annual general meeting on an external certified auditor or auditing firm to carry out auditing of the fund.

 Managing Director

5.12. The fund’s Board of Directors shall hire a Managing Director, determine their salary and other terms of employment, grant the Managing Director power of procuration for the fund and set rules on their work. The Managing Director is not eligible to serve as a director of the fund. 

5.12.1. The Managing Director is responsible for the fund’s daily operations, that they accord with statutory provisions and the fund's Articles of Association, together with policies and instructions issued by the fund's Board of Directors. The Managing Directors shall hire other personnel for the fund. The Managing Director may not participate in business operations unless the Board of Directors has granted permission for such.

5.12.2. Daily operations do not include measures which are unusual or of major significance. The Managing Director may only take such measures in accordance with specific authorisation from the Board of Directors, unless it would not be possible to await decisions of the Board without considerable 
inconvenience for the fund’s operations. In such instances the Board shall be notified of the measure. The Managing Director is to ensure that the fund’s accounts are kept as provided for by law and good accounting practice and that handling of its assets is secure.

5.12.3. The Managing Director is required to provide the fund's Board of Directors and auditors with all information on the fund's situation and activities they request Special eligibility of directors

5.13. The rules of Chapter II of the Administrative Procedures Act, No. 37/1993, on special eligibility apply, as appropriate, to the handling of cases and decisionmaking by the fund's Board of Directors in individual cases.The eligibility of persons endorsed by the fund to work as directors

5.14. The general and special eligibility of directors endorsed by the fund to work as directors in individual companies is governed by the rules of company law and the special rules of the companies concerned. In addition, considerations expressed in LV’s policies and criteria are taken into account.
Other provisions regarding mandate and duties

5.15. Directors, the Managing Director and others authorised to represent the fund may not take any measures which are clearly liable to unduly promote the interests of certain fund members, enterprises or others beyond those of other parties or to the detriment of the fund. 

5.16. The Board of Directors, the Managing Director and other employees, as well as the auditors of the fund, are bound by an obligation of confidentiality concerning anything they may become aware of in their work for the fund and which should by its nature or by law remain secret.

Remuneration Committee
5.17. The annual general meeting shall elect four individuals and two alternates to a Remuneration Committee for a two-year term. One of these committee members shall be the chairman of the fund’s Board of Directors.

5.17.1. The proportion of employers’ and employees’ representatives on the committee shall be equal. 

5.17.2. The committee shall have a quorum if three members attend a meeting. A simple majority of votes shall determine the committee's decision.

5.17.3. The committee shall adopt working rules and divide tasks between members.

5.17.4. The committee shall prepare and submit proposals for the remuneration of directors, both regular and alternate, to each annual general meeting. The committee’s proposals shall aim to have the remuneration of directors reflect the requirements made of them, for instance, regarding responsibility, 
specialised expertise, experience and the time required for Board work. The committee shall present its proposals to the Board no later than two weeks prior to the fund’s annual general meeting.

6.1. The fund’s annual general meeting shall be held before the end of June each year.

6.2. All members of the fund, members of the fund's Council of Representatives and rightholders in B and C Divisions are entitled to attend meetings with the right to speak and submit motions.

6.3. The fund's Board of Directors shall convene its annual general meeting with at least four weeks' notice. The meeting shall be convened with an advertisement in daily newspapers and a written announcement of the meeting sent to the fund's member organisations with at least four weeks' notice.

6.4. The fund’s Board of Directors may convene an Extraordinary General Meeting. Regarding the convening of the meeting, reference is made to Art. 6.3. An extraordinary general meeting may discuss the same items as are discussed at the annual general meeting; provisions on the annual general meeting shall apply mutatis mutandis to the extraordinary general meeting.

6.5. The Council of Representatives provided for in Art. 5 has the right to vote at the annual general meeting. The majority required shall be as provided for in Art. 5.7.2.

6.6. The annual general meeting has supreme authority in the affairs of the pension fund unless otherwise provided for by law or in these Articles of Association.

6.6.1. At the annual general meeting the following shall be presented:
    6.6.1.1. Report of the Board of Directors
    6.6.1.2. Annual financial statements for the previous year of operation 10
    6.6.1.3. Actuarial audit
    6.6.1.4. The fund’s investment strategy;
    6.6.1.5. The fund's shareholders' policy
    6.6.1.6. Composition of the Board of Directors
    6.6.1.7. Composition of the Council of Representatives

6.6.2. At the annual general meeting the following shall be presented and voted 
on:
    6.6.2.1. The fund's Remuneration Policy
    6.6.2.2. Selection of members for the Remuneration Committee
    6.6.2.3. Motion on directors’ remuneration
    6.6.2.4. Motion of the Board of Directors for an auditor or audit firm
    6.6.2.5. Motion of the Board of Directors to amend the fund’s Articles of Association

6.6.3. Other business.
6.7. Motions for resolutions by the annual general meeting must be submitted to the fund's Board of Directors in writing no later than one week prior to the annual general meeting. 

7.1. The fund’s financial year shall be the calendar year. Audited financial statements must be available no later than 1 March of the following year.

7.2. The fund’s annual financial statements shall be audited by a certified auditor or audit firm. The fund's annual financial statements shall be prepared in compliance with laws and good accounting practice. Statutory provisions shall apply concerning eligibility of auditors.

7.3. Provisions of Chapter IX of Act No. 129/1997 apply to supervision of the fund’s activities.

7.4. Contributions paid to B and C Divisions shall be the private property of the rightholder paying them and specified in their individual account. 

7.5. The operations of B and C Divisions shall be financially separate from the operations of A Division. Joint costs shall be allocated in a reasonable and unambiguous manner among the operational areas of the divisions.

7.6. The interest which is to be credited to B and C Division private pension accounts at the end of the year shall be calculated for each private pension account on the balance at the beginning of the year and of the payments and disbursements during the year in accordance with the Division’s return on 
assets. 

8.1. Each year the fund's Board of Directors shall have an actuarial audit carried out of the A Division’s financial situation and its future position assessed. This audit shall be part of the fund’s accounts each year. The actuarial audit shall be carried out by an actuary or other party accredited for such work. The audit shall take into account the provisions of Chapter IV of Regulation No. 391/1998. The audit shall be sent to the Financial Supervisory Authority (FSA) of the Central Bank of Iceland.

8.2. The pension fund's net assets for payment of pensions, together with the present discounted value of future contributions, shall be equal to the present discounted value of the expected pensions arising from contributions already paid and future contributions. The plan for future contributions and expected 
pensions shall be based on the fund members at the time used as a basis for the actuarial audit.

8.3. Should the actuarial audit reveal greater deviations between asset items and pension liabilities, as referred to in Art. 8.2, than are provided for in the second paragraph of Article 39 of Act No. 129/1997, the fund's Board of Directors must make proposals to the fund's member organisations on necessary 
amendments to the fund's Articles of Association. The fund's Board of Directors may increase or decrease the pension entitlement if the difference between asset items and pension liabilities is within a 5% limit, after consultation with the fund's actuary. 

9.1. The fund's Board of Directors formulates its investment strategy and sees to the allocation of its capital. It is required to invest its capital with a view to obtaining the best terms available at any given time, taking into account the risk and the fund's long-term obligations. The fund’s Board may formulate a separate investment strategy for each individual division of the fund, cf. Articles 3.1, 19.4 and 20.5.
The fund’s investments and investment strategy shall comply with statutory authorisations and satisfy all the requirements concerning form and substance made by mandatory statutory provisions of the Act on Mandatory Pension Insurance and on the Activities of Pension Funds, currently Chapter VII of Act 
No. 129/1997, and all current binding administrative provisions. 

9.2. The fund’s Board of Directors shall formulate an investment strategy which sets criteria for the extent of investments in individual types of assets, cf. Art. 9.1. It shall also set out objectives, among other things, for the distribution of assets, duration of claims, currency composition, liquidity and other criteria 
that the Board of Directors considers necessary to provide as clear a picture of the pension fund’s financial position as possible.

9.3. At the annual general meeting, the Board shall submit an investment strategy and account for changes from the previous year. 

Contribution base and minimum contribution to the mutual division, A Division
10.1. A fund member’s minimum contribution to A Division shall be 12% of total salary and remuneration for all types of work, duties or service, whatever they are called, if they are taxable under the first paragraph of Point 1 of Part A of Art. 7 of Act No. 90/2003, on Income Tax. The contribution base does not, however, include benefits paid in kind or payments which are reimbursement of expenses paid, cf. the first paragraph of Art. 3 of Act No. 129/1997. In the case of employees, the contribution is divided so that the employee pays 4% while the employer pays 8%. 

10.2. The contribution base of a fund member who is a sole proprietor or self-employed shall be at least equal to the amount provided for in the second paragraph of Point 1 of Part A, Art. 7 of Act No. 90/2003 on Income Tax, cf. Art. 58 of that Act, cf. also Art. 3 of Act No. 129/1997.

Contributions to private pension divisions, B and C divisions
10.3. The amount of contributions paid to B Division, the private pension division, is voluntary. The proportion of the contribution base paid to a specified private pension in C Division depends upon the decision of the fund member, within the limits allowed by law and these Articles. 

10.4. Contributions paid to B or C Division do not give entitlement to a pension from A Division or a predetermined pension. Disbursement of a balance in B Division is made pursuant to the provisions of Art. 19.3 and a balance in C Division is paid out in accordance with the provisions of Art. 20. 4.
End of contributions and limitation of liability for obligations 

10.5. No one pays contributions to A Division of the fund after reaching age 70.

10.6. Fund members are not liable for the fund’s obligations beyond their contributions. 

Remitting contributions and statements to fund members
10.7. Employers must deduct employees' contributions from their wages and remit them to the fund each month, together with their own portion of the contribution. At the same time, the employer must send the fund a remittance form for the contributions. The due date for each month's contribution is the 
10th of the following month. If payment is not made within that month, default interest shall be charged on unpaid contributions from the due date to the date payment is made pursuant to provisions of the current Interest Act. Employers and self-employed persons must notify the pension fund if they are no longer obliged to remit contributions, as their employees have ceased work or they have ceased their own activities.

10.8. Paying fund members shall receive a statement at least twice a year of contributions paid on their behalf. The statements shall be accompanied by a request that fund members send notice without delay of any shortfall in remittance of contributions. If objections from fund members, substantiated by pay slips, have not been received by the fund within 60 days from the date of the statement and the fund is not aware of the contribution claim, the fund is only responsible for entitlement based on these contributions to the extent that they can be collected. However, the fund is not liable for entitlement arising from contributions lost through bankruptcy which are not covered by the Wage Guarantee Fund under Article 6 of Act No. 53/1993.Furthermore, the fund shall at least once a year send each paying fund member, in tandem with the statement of contributions, and those who have reached retirement pension age, information on their earned and projected entitlement, on the fund’s operations and financial situation, the main conclusions of the actuarial audit and any amendments to these Articles of Association.
The pension fund may send fund members the statements provided for in this Article by electronic means if members so request or if authorised by law or other currently applicable regulations. Statements shall then be made available to fund members on the members’ area of the fund's website.

Contributions in arrears
10.9. Contributions in arrears, which can be verified by means of submitted pay slips, shall be collected in the same manner as employers’ remittance forms. The fund may base collection actions on estimates of unpaid contributions, if the respective employer has not submitted remittance forms to the fund for 
the period in question.

10.10. All employers' remittances, whether received with a new remittance form or otherwise, shall be credited towards the oldest unpaid contributions and default interest of the relevant employer. The fund’s Board may, however, derogate from this rule in cases where formal collection of contributions in 
arrears for a specified period has commenced and an adequate guarantee has been provided for payment of contributions, default interest and collection costs for this period. Furthermore, if the law provides otherwise, cf. handling of matters during the employer’s moratorium. A remittance form amount is 
considered unpaid until sufficient payment is made to fully cover the remittance form amount and interest accrued on it.

Division of entitlement between spouses
10.11. With an agreement between a fund member and spouse, the fund member can decide that up to half of contributions paid on their behalf, which are to establish a retirement pension entitlement under Art. 10.1 and 10.2, shall be used to create an independent retirement pension entitlement for their 
spouse, cf. Art. 12.8. 

11.1. By paying contributions, fund members acquire the entitlement to retirement and disability pensions for themselves and the right to spouse’s and child’s pensions for their spouses and children, as provided for in Articles 11 to 15 and the fund’s entitlement tables I and II which are published in Annex A to 
these Articles and comprise part of them. Minimum insurance coverage is based on contributions commencing at age 25. Table I shows annual retirement pension entitlements from the age of 67 years 
for each ISK 10,000 contribution paid. Table II shows the reduction in retirement pensions if drawing of the pension begins before the age of 67 and the increase if drawing of the pension begins after age 67. The combined contributions of the fund member each calendar year form the basis of their 
pension entitlement.

11.2. The entitlement to pension earned depends upon the age of the fund member at the end of the salary month for which a contribution is paid to the fund according to Table I of Annex A, cf. however, Art. 11.4. The entitlement is indexed and changes in accordance with changes in the Consumer Price Index 
(CPI) used for indexation, from that of the salary month for which the contribution is paid. The pension entitlements are defined in Articles 12 to 15; cf. however, provisions of those articles concerning the continuing equal earning of pension entitlement. 

Actuary's recommendations for new entitlement table

11.3. The fund's actuary shall make a proposal to the Board of Directors for new entitlement tables in Annex A, taking into account the fund’s future situation. The actuary shall furthermore propose new entitlement tables when the present discounted value of contributions to cover pension entitlements in the 
age-related entitlement table is more that 5% less than or in excess of the present discounted value of age-related future entitlements. Such changes shall be presented to the fund's member organisations and at its annual general meeting.

Equal earning of pension entitlement
11.4. A fund member who held a pension entitlement at year-end 2005 may continue to pay contributions up to a certain maximum with equal earning of entitlement for as many months as the member had paid contributions prior to age 42 and before year-end 2005. If the member has, however, paid contributions for more than 5 years during this period they are entitled to pay up to the reference contribution for equal earning of entitlement up until age 70, cf. Art. 11.5.
11.5. The maximum contribution payable for equal earning of entitlement each year, referred to as the reference contribution, at most 10% of the contribution base, shall be determined for each fund member aged 25 to 69 years as equal to the contributions the member paid to the fund in 2003 or the last year in which contributions for that member were received by the fund if this was prior to 2003. A reference contribution is not calculated for members under 25 or older than 70 years of age on 1 January 2006. The above reference contribution shall be indexed to the CPI used for indexation from the reference 
year to the payment year in each instance.

11.6. Equal earning of entitlement as referred to in Art. 11.4 is calculated in ISK as the average annual entitlement for each ISK 10,000 contribution from age 25 to 64 years according to Table I of Annex A to these Articles of Association, where the average is shown separately.

11.7. The fund’s Board shall inform members of the calculation of their reference contribution for equal earning of entitlement, as provided for above, within three months of their first payment to the fund after 1 January 2006. If, in the fund member’s estimation, the reference year does not give a fair picture of 
their regular contribution payments, for instance, due to periods without work, or if payments were suspended during the year, the member may request to the Board that another year be used as the basis for calculating the reference contribution. The fund’s Board of Directors may then base the reference contribution on the nearest preceding year which gives a fair picture of the fund member’s regular contribution payments. A request for a review of the reference contribution must be received in writing by the fund no later than 9 months after the fund member was notified of the calculation of the reference contribution.

11.8. Contributions received in excess of the reference contribution referred to in Art. 11.5 create age-related entitlement according to Table I of Annex A. 

11.9. All contributions received by the fund each year for a fund member who has a defined reference contribution as referred to above shall be credited towards equal earning of entitlement until the reference contribution has been reached or the calculated contribution payment period concludes, cf. Art. 11.4. A fund member who has a defined reference contribution may at any time decide that all of their contribution shall be credited towards entitlement under an age related entitlement table. The fund member’s decision on this shall take effect from the beginning of the year in which written notification from the member is received by the fund; this decision is irrevocable.

11.10. Contributions received by the fund on behalf of members who have been paying into the fund for less than 5 years before 42 years of age, cf. Art. 11.4, as of year-end 2005 shall be placed in equal earning of entitlement for as many months as the period of the member’s contribution payments prior to 42 years 
of age, until the reference contribution is reached. In such instances the fund shall take care specifically that these members earn entitlement according to those rules which give them greater entitlement for the period in question.

11.11. As soon as contributions for a given calendar year are received for fund members who have a defined reference contribution, they shall be allocated to individual months in the same proportion as those contributions which have already been received. That portion of each month's contributions in excess of the reference contribution for the month shall give the member entitlement as provided for in Art. 11.2. If a fund member does not pay contributions for every month of a given calendar year, their reference contribution shall be calculated proportionally for the number of months paid. 

11.12. Projection of entitlement pursuant to Articles 13 and 14 shall be based on equal earning of entitlement for the share of the member's reference contributions in those contributions used as a basis for projection of entitlement.

11.13. Projection of entitlement shall be made according to the rules which applied when the entitlement to a pension became active. The pension entitlement is the sum of earned pension entitlement and projected entitlement, if a ruling has been given on such entitlement.

11.14. When the Board of Directors decides on an increase in entitlement, this shall be kept separate from other rights. An increase in entitlement is not included in projection but is fully calculated in the earned entitlement. If the Board decides on a reduction in members’ earned entitlement, the reduction shall be applied in the same way as an increase in entitlement, except that the reduction is deducted from the earned entitlement.

11.15. The fund's Board may conclude agreements with other pension funds which have applied equal earning of entitlement in 2003 for mutual recognition of pension contributions in calculating the reference contribution referred to above. The fund may also participate with other funds in maintaining a 
harmonised computer record of persons’ rights to equal earning of entitlement and provide for the allocation of this right if contributions are paid to more than one fund.

11.16. Fund members’ earned entitlements for contributions until the end of 2005 shall be preserved in accordance with those rules on entitlement which then applied. They shall be converted to ISK based on the points earned each year and the basic salaries in effect at year-end 2005. They then change on a 
monthly basis in accordance with changes in the CPI used for indexation.

Projection
11.17. When projecting entitlement, subject to the relevant conditions which apply under Art. 13.5, calculation of a spouse's or disability pension shall be based on the average annual contribution payments of the three calendar years prior to loss of ability or death. If the average contribution payment is more than ISK 1,784,348, the projection of entitlement shall use the average contribution for up to 10 years and subsequently to age 65 using a contribution of ISK 1,784,348 per year plus half of the average contribution in excess of that. The amounts change at the beginning of each year to reflect changes in the CPI used for inflation indexation, with the base index 513.0 points in January 2022.

11.18. Should the salary paid to a fund member cease due to illness or unemployment, the member shall not earn any entitlement while this is the case. The period during which contributions have verifiably ceased for this reason shall not be included in determining whether the requirements for the contribution 
payment period are satisfied.

Protection of earned entitlement

11.19. Entitlement to a retirement, disability and spouse’s pension is not cancelled even if a fund member ceases to pay contributions. The entitlement is then based only on the earned entitlement, cf. however, Articles 11.17 and 13.11.