Key in­form­a­tion about pen­sion sav­ings

In Iceland, all wage earners aged 16 to 70 are obligated to pay a percentage of their wages toward mandatory pension savings.
13 January 2023 - Landsbankinn

We recommend that you also conclude an agreement for supplementary pension savings which gives you a pay increase of 2% you don't otherwise get.

Mandatory pension savings

According to law, the minimum contribution is 12% of wages, yet most collective bargaining agreements stipulate a minimum contribution of 15.5% with the wage earner always contributing 4% and the employer 8% or 11.5%. These pension contributions ensure a life-long pension.

Supplementary pension savings

If you are starting work in Iceland, we recommend that you conclude an agreement for supplementary pension savings paid to a private pension scheme. If you contribute 2-4% of your wages to supplementary pension savings, your employer will contribute an additional 2% of wages - a de facto wage increase you won’t get otherwise.

You can use your supplementary pension savings to purchase your first apartment in Iceland, both as a down payment and as an instalment on your mortgage. These payments are exempt from taxation and can be used over a 10-year period.

Does it matter where I invest my pension contributions?

Many people don’t see a huge difference between pension funds. This isn’t entirely accurate. What is unique about Íslenski lífeyrissjóðurinn is that you can decide how high a percentage of your mandatory pension savings will be invested in a private pension division.

Private pension is inherited in full. The portion of your contributions not invested in a private pension division is paid to a mutual division that ensures life-long pension as well as spouse’s, children’s and disability pension. In traditional pension funds, the lion’s share of pension contributions is invested in a mutual division for all fund members.

Íslenski lífeyrissjóðurinn is a smart option for those who wish to combine the advantages of mutual and private pension schemes.

Advantages of allocating part of mandatory pension contributions to a private pension scheme:

  • Flexibility upon disbursement.
  • Gives you the option of retiring earlier, as assets in private pension schemes are available for withdrawal at 60.
  • Private pension savings are fully inheritable.
  • Interest is not liable for capital income tax.

Payment plans

For mandatory pension contributions, you can choose between four payment plans with variously high private pension contributions. You can allocate between 43-75% to private pension that is fully inheritable (based on a 15.5% mandatory contribution).

We recommend payment plan I if you are just entering the labour market and have not accumulated rights in other pension funds. If this is the case, it can be good to build rights in a mutual division as well.

If you are nearing retirement, we recommend paying the majority of your contributions to a private pension division.

Investment options

We meet different needs and attitude to risk by offering varied investment options, 7 options for supplementary pension savings and 4 for mandatory pension savings.

Íslenski lífeyrissjóðurinn offers 4 independent investment options and for supplementary pension savings, we also offer Landsbankinn's Lífeyrisbók (an inflation-indexed and non-indexed account) and pension savings in a portfolio of international securities (Lífeyrissparnaður – Erlend verðbréf).

We recommend savings plan Lífsbrautin with Íslenski lífeyrissjóðurinn. This plan automatically transfers you between the four investment options as you grow older, reducing fluctuations as you near retirement age.

Take a look at returns over the past 15 years

Leaving Iceland

If you are emigrating from Iceland, you may be able to move part or all of your pension savings with you.

Nationals of other EEA member states cannot withdraw pension savings upon emigration from Iceland. This applies to both mandatory and supplementary pension savings.

US and Canadian nationals are authorised to withdraw their supplementary pension savings and any unrestricted private pension savings created as part of mandatory contributions upon emigration from Iceland.

Nationals of countries outside the EEA, US and Canada are authorised to withdraw their entire pension savings upon emigration from Iceland.

More information

Disbursement

Disbursement of pension savings takes place at a certain age, disability or death. It is easy to apply for disbursement via the fund member portal or by contacting Landsbankinn Investment Services via email to  VL@landsbankinn.is or phone to +354 410 4040.

Landsbankinn online banking

You’ll find information about the balance, rights and transaction statements for your pension savings in online banking under Pension savings.

The article was initially published 30 November 2022 and revised 13 January 2023.

You may also be interested in
Höfuðstöðvar Landsbankans í Austurstræti
22 Sept. 2023
Last day in Austurstræti
Today is the last day the Landsbankinn branch in Austurstræti 11 is open and the doors close at 16:00. All activities move to the Bank’s new branch in Reykjastræti 6, which is already open.
Reykjastræti
21 Sept. 2023
Reception of Danish bank notes
Customers can buy Danish bank notes in Landsbankinn branches and ATMs throughout Iceland. We would like to advise customers that the Bank no longer accepts DKK 1,000 and 500 bills, nor any Faroe Islands króna bills. There are no changes to transactions in DKK 200, 100 and 50 bills. Cash transactions comply with the Act on Actions to Combat Money Laundering and Terrorist Financing. Tighter rules in Denmark limit the reception of bank notes by foreign banks and Landsbankinn is as a result no longer able to accept DKK 1,000 and 500 bills.
Grænland
21 Sept. 2023
Landsbankinn Corporate Finance co-ordinated uplisting of Amaroq to the Nasdaq Iceland Main
Amaroq Minerals, under the ticker AMRQ, has now been listed on the Main Market of Nasdaq Iceland. In addition to listing on the Nasdaq Iceland Main Market, Amaroq’s shares are listed on stock exchanges in Canada (TSX-V) and London (AIM). Alongside uplisting to the Main Market of Nasdaq Iceland, Amaroq has been delisted from First North Iceland. Amaroq Minerals is the first listed mining company in Iceland. The company holds a significant licence portfolio in Greenland and is engaged in the identification, acquisition, exploration and development of gold properties and other strategic mineral assets, pivotal to the energy transition. Landsbankinn Corporate Finance co-ordinated the listing process. We congratulate the staff and shareholders of Amaroq on the successful transfer of the company’s listing.
Tölva á vinnuborði
14 Sept. 2023
Updates to the RSA app - new name and icon
We’d like to call your attention to changes to the RSA SecurID app used for secure login and payments in corporate online banking.
Reykjastræti
13 Sept. 2023
Branch opening in Reykjastræti
The branch at our new headquarters in Reykjastræti 6 opens today. Cashier services are available from 10:00-16:00 and ATMs and other self-service equipment is accessible around the clock.
Sunna Ósk Friðbertsdóttir
12 Sept. 2023
Sunna Ósk Friðbertsdóttir new Landsbankinn Compliance Officer
Sunna Ósk Friðbertsdóttir has taken up the position of Compliance Officer at Landsbankinn. Sunna completed a BA degree in law from Reykjavík University in 2008 and an ML degree from the same institution in 2010. She is a licensed securities broker and a recognised District Court Attorney. Sunna came to work for Landsbankinn as a lawyer in 2012 and has had various responsibilities, both in implementing legal requirements and related to daily operations. She has worked in Compliance since 2017 and been Deputy Compliance Officer since 2022. Compliance supervises and monitors Landsbankinn’s compliance with internal and external rules and advises and educates on legal and regulatory demands relevant to the Bank’s operation.
New temp image
31 August 2023
Landsbankinn changes interest rates
In light of the recent interest rate decision of the Central Bank of Iceland, the following changes will be made to Landsbankinn’s interest rates. Interest rate changes also have regard for market rates and other funding terms of Landsbankinn.
Screenshot of fraudulent message
31 August 2023
Beware of fake text messages - do not open the link
This is a warning concerning a fake website made to look like that of Auðkenni and which includes a fraudulent connection to Landsbankinn.
23 August 2023
Shorter opening hours in 7 branches - service hours remain unchanged
On 13 September, the opening hours of seven branches will be shortened by three hours and will as a result be 12:00-15:00. While general opening hours will be shorter, customers can still make appointments to visit these branches between 10:00-16:00 and book remote meetings until 18:00, meaning that actual service hours remain unchanged. ATMs are accessible around the clock in all these locations.
Myndlistarsýning
18 August 2023
Cyclical– art exhibition opens in Austurstræti 11 on Reykjavík Culture Night
A new exhibition of art from Landsbankinn's collection will be opened in the event of Reykjavík Culture Night in the Bank’s branch at Austurstræti 11. The exhibition is titled Cyclical and is curated by Daría Sól Andrews.
Cookies

By clicking "Allow All", you agree to the use of cookies to enhance website functionality, analyse website usage and assist with marketing.

More on cookies