Specified personal pension

Mutual insurance division	Specified personal pension
Lifelong pensions	Personal property of the fund member
Gives a right to disability pension	Withdrawals can begin at age 62 years.
Gives a right to child's and spouse's pensions	Not a lifelong pension
The normal age to begin drawing a pension is 67 years.	Does not give a right to disability, spouse's or child's pensions.
Drawing of pensions can begin earlier or later.	Can be withdrawn in case of disability like personal pension savings.
	Cannot be used for payment towards mortgages.

Specified personal pension savings

• Specified personal pension savings are the fund member's personal property and are inherited as provided for by the Inheritance Act.
  
• The rules which apply to specified personal pension savings differ in some respect from those of unrestricted personal pension savings. Specified personal savings are free for withdrawal from age 67. They can, however, be withdrawn up to five years earlier, in which case the payments must be distributed over the period which remains until the fund member reaches 67 years of age.
  
• Specified personal pension savings comprise a separate fund owned by the fund member. It cannot therefore confer the right to a lifelong pension; instead, the fund decreases with each withdrawal until it is eventually exhausted.
  
• Specified personal pension savings cannot be utilised for making payments on loans or other disposition of personal pension savings authorised by special government measures.
  
• Specified personal pension savings can be withdrawn in the case of disability, like unrestricted personal pension savings. However, specified personal pension savings do not give entitlement to disability, spouse's or child's pensions.
  

Mutual insurance division

You can choose to place all or part of the additional contribution into a mutual insurance division, as previous contributions have been placed. If no such choice is made the entire increase will automatically go to the mutual insurance division. By contributing to the mutual insurance division you earn important entitlements and insurance coverage.

You won't collect up a specific balance on an account, as is the case with personal pension savings, but instead you get a guarantee for lifelong pension payments from the time you begin to draw your pension.

Lifelong pension payments, based on your earned entitlement, will be paid until the end of your life. Other wages or payments do not reduce your lifelong pension.

In addition to a lifelong retirement pension you earn the right to disability pension if your capacity for work is reduced. You also earn the right for your spouse to receive a spouse's pension upon your death and for your children to receive children's pensions should your capacity for work be reduced or upon your death.

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 age 80.

Difference between personal pension savings and specified personal pension

Personal pension savings (also often referred to as supplementary pension savings or private pension savings) are a fund member's voluntary pension scheme. You can place up to 4% of your wages in personal pension savings, and are then entitled to a matching 2% contribution from your employer. Under special rules set by the government, personal pension savings can be used for housing purchases and/or to reduce the principal of housing mortgages. Fund members can draw on personal pension savings from age 60 onwards.

A specified personal pension is one option for allocating additional contributions from your employer. A fund member may choose to allocate this increase, in whole or in part, to a specified personal pension. If no division of the contribution is chosen, all the additional contributions will be placed in a mutual insurance. The specified personal pension is different from personal pension savings in that the premium is not optional for the fund member; however, he/she can choose how it is allocated, either in a mutual fund or specified personal pension. The specified personal pension is invested in LV's C division, according to one of three investment options chosen by the fund member. Specified personal pensions can be drawn from age 67. Payments can, however, begin up to five years earlier if the monthly payments are spread equally over at least the years remaining until the pensioner reaches 67 years of age. 

Investment options

Fund members choose one of three investment options. If none is selected. the Ævilína option is chosen by default.

Ævileið I – long-term option:	The objective is to have the portfolio deliver a good long-term return with effective diversification of assets. Suitable for an investment period of over 7 years.
Ævileið II  – more cautious option:	The objective is to have the portfolio deliver a steady return with limited risk. Suitable for an investment period of over 5 years.
Ævileið III – Withdrawal option:	The objective is to preserve the portfolio's accumulated assets while delivering a positive real return

Ævilína option, automatic transfer between portfolios with increasing age
Contributions and entitlements are transferred from Ævileið I to Ævileid II at age 55 and from Ævileið II to Ævileid III when withdrawals begin. 

Changing investment options. Members can change their investment options and transfer their accumulated specified personal pension from one option to another. This must be notified to the Fund on a form for this purpose.

Disposition of specified personal pension savings

On the fund members' area (Sjóðfélagavefur) of LV's website you can choose where to direct the additional contribution. To access the website you need electronic ID. If you do not have electronic ID you can print out the notification of informed consent, fill it out and deliver it to LV.

• To direct electronically where the increase in the employer's contribution will go, click here .
• Click here to obtain the form to direct where the employer's contribution will go in writing.

Directing the contribution to another custodian

A member wishing to transfer that portion of the contribution which is specified personal pension savings to another custodian must send a notification to the fund with a request for the allocation of the increase in the employer's contribution which forms specified personal pension savings.

• This notification must be accompanied by a copy of an agreement reached with the custodian to receive the contribution portion of the specified personal pension savings or other agreement considered valid by the pension fund.