Fund members who are between the age of 16 and 70 pay 4% of their total wages to the fund, i.e. fixed wages, overtime and bonuses.
Employers pay a 8,5% reciprocal contribution, according to a wage agreeement between the VR trade union and SA-Confederation of Icelandic Employers (Samtök atvinnulífsins).
Self-employed people pay 12,5% of their total wages, i.e. both the employee's and the employer's contribution.
The contribution base does not include payments which are intended to cover expenses incurred, e.g. vehicle allowances.
Pension contribution is tax free
Exempt from income tax is the employee's 4% contribution and the supplementary contribution of up to 2% to a private pension fund.
Also exempt from income tax is the employer's 8% reciprocal contribution and the private pension fund contribution.