Support pensions

Disability pensions

You are entitled to a disability pension if your work capacity is reduced due to illness or accident and this reduction is assessed as at least 50% by the fund's medical officer.

The Act on Mandatory Guarantee of Pension Rights and Operation of Pension Funds lays down the basic rules of disability pensions. Furthermore, it provides for each pension fund to adopt more detailed rules in its Articles. The rules can vary somewhat from one fund to another. LV's Articles of Association include rules on disability pensions, the requirements for a disability pension and how it is calculated.

When am I entitled to a disability pension?

You must be younger than 67 years of age and have paid contributions to a pension fund for a total of at least 24 months prior to your loss of capacity. Loss of capacity refers to the accident or illness which resulted in the reduction to your capacity for work. Your entitlement to a disability pension is not cancelled even if you cease to pay contributions. This applies only if you have suffered a loss of income due to the loss of capacity. Your entitlement is then based on the credits you have already earned.

In other words:

 

• you are incapable of doing the work which made you a member of the pension fund
• your disability is assessed as at least 50%
• you have suffered a loss of income due to the disability
• the disability must have lasted more than 6 months.

 

Spouse´s pensions

When you contribute to a pension fund you are not only earning entitlement for your senior years, when you cease working, but also ensuring to some extent your family's situation in the event of your death. Upon your death your spouse is entitled to a spouse's pension from the fund.

How long is the spouse's pension paid?

 

• If you have children under 23 years of age: Your spouse will receive a spouse's pension until the youngest child has reached the age of 23.
•  he spouse's pension is paid as long as the spouse is disabled until he/she reaches 67 years of age.
• Inflation-indexed spouse's pension: This is based on indexing the member's pension contributions up until and including December 2014 to present price levels. This means the spouse will receive a pension based on the fund member's contributions plus indexation. The number of months the indexed spouse's pension is paid is calculated by dividing the total amount of the indexed contributions, net of indexed pension payments, by the monthly amount of the spouse's pension. 
• If your spouse is born before 1925: Lifelong pension is paid.
• If your spouse is born in 1925-1945: Your spouse will receive a lifelong pension but the amount will decrease on a sliding scale according to the year of birth.
• As indicated above, the amount of the spouse's pension varies but is always paid for at least five years. 50% the last two years.

 

How is the spouse's pension calculated?

The spouse's pension is 60% of the fund member's earned entitlement at age 67 years. A member who satisfies the following conditions is entitled to have his/her entitlement extrapolated to age 65:

 

• has paid pension contributions for at least 3 of the 4 years prior to decease;
• has paid pension contributions for at least 6 months of the last year prior to decease;
• has paid pension contributions of at least ISK 178,345* each of the three years.

 

The spouse's pension will therefore be 60% of the earned and extrapolated entitlement.

*178,435 is the basic reference amount and must be inflation-indexed at the beginning of each year using the CPI, with the base index 513.0, see Art. 16.8 of the fund's Articles of Association.

Who is a spouse?

A spouse is the person who, upon the death of a fund member, is:

 

• married to the deceased person;
• in a registered partnership with the deceased person;
• a co-habiting partner of the deceased person.

 

The financial partnership of the spouse and the deceased may not have been divided prior to the latter's death, i.e. married or cohabiting couples must have had joint finances at the time of death.

Can the spouse's pension be cancelled?

If the spouse marries again or becomes a co-habiting partner in the period during which he/she is entitled to a spouse's pension, the entitlement is cancelled.

Child´s pensions

 

Child's pensions are paid for your children if you die or become disabled. Foster- and step-children dependent upon you have the same entitlement.

What are the requirements for payment of child's pensions?

The requirements for payment of child's pensions are that the deceased spouse/parent has paid contributions to the pension fund for 2 of the last 3 years or for at least 6 months of the last year prior to decease.

If you are disabled and receive a disability pension from the fund you are entitled to a child's pension if you have paid contributions to the fund for 2 of the last 3 years or if you are entitled to extrapolation. The child's pension entitlement is always the same proportion as the disability pension.

How much is the child's pension?

The child's pension is currently around ISK 25.363 per month for each child and is paid until the child reaches 20 years of age. Child's pensions are inflation-indexed with reference to the CPI.

A child's pension may be reduced if paid in tandem with a reduced disability pension. It may also be reduced if the member's annual contributions have not amounted to at least ISK 178,435* during the reference period prior to the parent's death.

*178,435 is the basic reference amount and must be inflation-indexed at the beginning of each year using the CPI, with the base index 513,0, see Art. 16.8 of the fund's Articles of Association.

To whom is a child's pension paid?

A child's pension following the death of a parent is paid into the child's account; a child's pension due to disability is paid to the person receiving the disability pension.