Useful information

The agreement between ASÍ and SA of 21 January 2016 on the increase in the employer's contribution from 8% to 11.5% provides for employers in all circumstances to remit both their own contribution (11,5%) and the employee's contribution (4%) to the mandatory pension fund of the employee concerned. As of January 1st 2023 the minimum premium of 15,5% of all wages is mandatory by law. 

The employee's right to direct part or all of the increase to a specified personal pension is the concern of the pension fund in question and is no concern of the employer.

Pension contributions and union dues

General pension fund contributions

The minimum contribution to earn pension entitlement is 15,5% of gross wages. Employees pay 4% of their wages and employers 11,5%.

The last payment is made to the fund the month that the fund member turns 70 years of age. The first pension payment is made to members in the month they reach retirement age. Generally members begin to draw their pensions at age 67. However, early retirement is possible from age 60 and retirement can also be delayed to up to age 70 (see here for details). 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.

A self-employed person pays both the employee's and employer's contributions.

Contributions to personal pension savings

Most collective bargaining agreements provide for a 2% employer's contribution to an employee's personal pension fund, which means that persons who contribute 2-4% of their savings in this manner receive a 2% contribution from their employer.

Union dues

Union dues are calculated on the same basic wages as pension fund contributions under collective bargaining agreements. The fund collects union dues for the following unions:

• VR
• Union of Dental Technicians and Dentists' Assistants (FTAT)

Click here for detailed information on union dues.

Employers and self-employed persons must notify the fund if they are no longer required to remit contributions because they have ceased their activities or their employees have ceased work. This is best done by sending an e-mail to netskil@live.is

Rehabilitation fund

 All employers are obliged to remit a fee amounting to 0.1% of gross wages to the vocational rehabilitation fund VIRK. This is mandatory under Art. 12 of Act No. 73/2011. The obligation to make payment also includes persons not covered by collective bargaining agreements.

According to the Act, employers must remit the fee to the pension fund to which they pay pension contributions. Pension funds, in other words, are to serve as intermediaries in collecting the fee and passing this on to the rehabilitation fund VIRK.

The fee to the rehabilitation fund is 0.1% of the base wages for pension fund contributions.

Click here for further information on the vocational rehabilitation fund VIRK.

Fees for collective bargaining agreements

Are paid by employers who are members of the Icelandic Federation of Trade (Félag atvinnurekenda) The fee is 0.17% of the base wages for pension fund contributions.

Payment of contributions

There are three possible routes for payment of contributions:

• Paying invoices sent via online banking.
• Making payments by online deposit to account 515-26-1007, Reg. No. 430269-4459.
• Making payment personally with a bank deposit.

	General payment details
Id./Reg. No.	430269-4459
Bank account no.	515-26-1007
No of the pension fund	860
No. of the personal pension fund division	861
VR union no.	511
FTAT union no.	962
Due date	10th day of the following month
Final date for payment	Last working day of that month
Fax	580 4099
Tel. no.	580 4000

Due date and final date for payment of contributions

Due date -10th day of the following month

For example: The due date for contributions for wages in October is 10 November.

Final date for payment -  Last working day of that month

For example: The final date for payment of contributions for wages in October is the last working day of November.

If payment is not made within the month penalty interest is calculated from the due date until the date payment is made.

Collection process

A collection process begins if contributions are not paid by the final date for payment.

The process is as follows:

• A warning is sent on the 15th of the first month after the due date, giving the debtor a time limit of 15 days to pay.
• If payment is not received, a letter of collection is sent on the 10th day of the second month after the due date, giving the debtor a time limit of 14 days to pay.
• The case is sent for legal collection in the third month after the due date.

As an example, if the August payment is in arrears:

• The due date is 10 September.
• The final date for payment is 30 September.
• A warning is sent on 15 October with the deadline for payment 30 October.
• A collection letter is sent on 10 November giving a time limit until 24 October for payment.
• In December the case is sent for legal collection.

Supervision by the Directorate of Internal Revenue (Ríkisskattstjóri, RSK)

At the end of each year the Directorate of Internal Revenue gathers information on wages for which contributions are to be paid and on the remittance of contributions to pension funds. This is done by comparing information on pay slips, tax returns and contribution remittances to pension funds.

Pension funds are obliged to collect unpaid contributions based on information from the Directorate of Internal Revenue, plus penalty interest.

Further information on this is available on the website of the Directorate of Internal Revenue.