Lifelong pensions

Normally retirement begins at 67 years of age. However, you have the option of taking early retirement from age 60 or postponing your retirement to up to 80 years of age. Contributions are not paid after the age of 70.

Beginning to draw your pension

As a general rule, members begin to draw a pension at 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 age 80. If you begin to draw your pension at age 70, the amount increases by 24.7% and by 222.9% at 80 years of age. You can begin to draw a pension at age 60 at the earliest. 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.

What effect does accelerating or postponing the drawing of my pension have on the pension amount?

Monthly payments to persons beginning to draw their pension before age 67 decrease by as much as 36.2%, depending upon 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 age 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.

Age when pension payments begin	Change to monthly payments
60 years	36.2 decrease
65 years	12.8 decrease
67 years	-
68 years	7.4% increase
69 years	15.6% increase
70 years	24.7% increase
75 years	90.5% increase
80 years	222.9% increase

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

Does income from employment affect my lifelong pension?

You can begin drawing your pension even while you are still working, in either a full-time or part-time position. This you can do once you reach age 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.

Where can I get information on my pension entitlement?

A pension calculator to estimate your pension income is accessible on the members' area Sjóðfélagavefur of the LV website. 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.

The pension fund also sends a statement twice each year with information on earned entitlement and expected pension payments to members paying contributions to the fund.

Can the right to a lifelong pension be inherited?

The right to a lifelong pension is not inherited.

However, your spouse 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 .

Can a spouse receive part of my entitlement to a lifelong 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 your pension.

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