As a general rule, members begin to draw a pension at the age 67. You can postpone taking your pension, in which case the amount increases with each month after you reach 67 years of age.  You can postpone drawing your pension up until the age of 80. If you begin to draw your pension at the age of 70, the amount increases by 24.7% and by 222.9% at the age of 80.

The earliest you can begin to draw a pension at is the age of 60. The amount decreases, based on how many months before the age of 67 you receive pension payments. 

Once a fund member has decided to begin drawing his/her pension, e.g. at 67 years of age, the first pension payment is made on the last working day of the month the member reaches that age, i.e. the month of his/her birthday.

Monthly payments to people who begin to draw their pension before the age of 67 decrease by as much as 36.2%, depending on when they begin, as the payment of pensions is then spread over a longer period.

On the other hand, if you choose to postpone drawing your retirement pension beyond the age of 67, the monthly payments will similarly increase. If you begin to draw your pension at the age of 70, the amount increases by 24.7% and by 229.9% at 80 years of age.

The following table shows the effect on monthly payments depending on whether the retirement pension is accelerated or postponed. The table is prepared by an actuary based on life expectancy in Iceland at any given time and can therefore change.

This table is also included in the fund's Articles of Association; the Articles take precedence over these figures in case of any discrepancy.

You can begin drawing your pension even while you are still working, in either a full-time or part-time position. You can do this once you reach the age of 60. If you are still working when you begin to draw your pension, you continue to pay contributions to the fund from your employment income just like before and in so doing continue to earn credits in the fund.

Under these circumstances your entitlement is re-calculated yearly. Your pension payments will then change to reflect your increased entitlement but your additional entitlement does not increase with age.

Income from employment does not reduce your lifelong pension benefits.

Yes, pension payments are taxed, like any other income from work. Pensioners can therefore utilise their personal deductions to lower taxes.

It is the responsibility of each pension recipient to give notice of the income tax rate which should apply. The fund must be informed of any income from parties other than the pension fund, so that payments from the fund can be taxed at the proper rate. 

Yes, you have to apply for pension. You can do it by logging on to My Pages or by filling out the pdf application form and returning it to the fund.

Applications made before the 20th of each months will receive payment by the end of the same month. 

A pension calculator to estimate your pension income is accessible on My Pages. There you can gain access to the Pension Portal (Lífeyrisgáttin) which provides information on each person's pension entitlements in all the pension funds to which he/she has made contributions at any time. By entering details of your wages, the expected age when you will begin drawing your pension etc. in the calculator you can estimate, based on these assumptions, how much the pension payments will be which you can expect to receive each month for the next few years after you begin drawing your pension.

Twice a year you will find new statements in My Pages with information on earned entitlement and expected pension payments to members paying contributions to the fund.

Pensioners whose legal address is registered outside of Iceland must send us a life certificate every year before May 15th. If the pension fund does not receive the certificate, pension payments will stop from June 1st of the same year. The life certificate can either be sent via mail or email to live@live.is.

The right to a lifelong pension is not inherited.

However, your spouse/partner is entitled to a spouse’s pension from the fund, based on the contributions paid by the fund member prior to his/her death.

The same applies to the entitlement to a child’s pension.

Yes, married couples and co-habiting couples can conclude an agreement to divide their earned entitlement and future entitlement.  An agreement on dividing pension payments can also be concluded after you begin drawing on your pension.

Click here to read more about how entitlements can be divided between couples.

By making payments to the fund members earn the right to lifelong pension benefits, disability pension and spouse's and child's pensions.

As a general principle of tax law the employee’s 4% contribution, the employer’s contribution and a supplementary contribution by the employee of up to 4% in a personal pension fund are exempt from income tax. 

Income tax must be paid, however, on your pension when you draw it.

It is important to keep track of whether contributions deducted from your wages are remitted.

You can log onto My Pages using electronic ID or your Íslykill password to view all payments received by the fund.

It is important to check that the contributions shown on the statement agree with your pay slips.  In the event of substantial failure to remit contributions, valuable pension credits could be lost.

If your pay slips do not match with the statement on My Pages you must contact the employer concerned and/or the fund’s collection division without delay.

Pension credits you have earned are preserved and inflation-indexed. When the time comes to draw your pension, you will be paid accordingly. Many people receive payments from more than one pension fund just as they received wages paid by more than one employer.

The entitlement to a disability pension is based on the Articles of Associoation of the respective pension fund and an agreement on co-operation between pension funds, to which most funds are parties.

No refunds are authorised to US nationals and citizens of countries in the European Economic Area (EEA). These countries are:

Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Norway, Portugal, Poland, Romania, Slovakia, Slovenia, Spain, Sweden and the UK, USA, as well as Switzerland.

A fund member who was a national of an EEA state while making contributions is not entitled to a refund of those contributions.

A fund member who is a national of two countries, of which at least one is an EEA state, is not entitled to a refund of pension contributions.

If the length of the contribution period is less than three years, with the result that no right to extrapolation for disability pension has been acquired, the national in question shall receive a refund of both his/her contributions and the employer's contributions with indexation linked to the CPI (Consumer Price Index) but without interest.

If the length of the contribution period is more than three years but less than five years, and the right to extrapolation for a disability pension has been acquired, the refund percentage shall be based on the following table of the Society of Icelandic Actuaries, where the age of the foreign national when the refund is made is the primary determining factor. The refund percentage is therefore based on the insurance coverage the member has enjoyed.

Where the length of the contribution period exceeds five years and substantial entitlement has been earned, the determination of the refund is appropriately done by the pension fund's actuary.

An application for refund must be accompanied by:

• confirmation from the employer of conclusion of employment;
• a copy of the person's passport;
• a copy of or confirmation of travel tickets;
• a copy of the final pay slip;
• an account number in an Icelandic bank.

Income tax is payable on the refund at source.

Information on the obligation of foreign nationals to pay pension contributions in Iceland is provided by:

Government of Iceland

Moving between states - Social Insurance Administration

National Association of Pension Funds

Individuals who purchase a residential property for the first time are authorised to use to some extent their personal pension savings towards it without tax liability (tax free). 

This authorisation applies to individuals who have not previously owned a residential property. The applicant has to purchase a property either him/herself or jointly with another individual, although the individual’s share of the property has to be at least 30%.

The application must be received by the Iceland Revenue and Customs office within twelve months from the signing of the purchase agreement. 

Find out more at the website of the Iceland Revenue and Customs (Skatturinn)