The Icelandic pension fund SL Lífeyrissjóður runs an interesting additional pension saving option, on top of the legally binding savings in place in Iceland.
The private pension savings fund accumulates savings that you have the option of paying in addition to statutory pension savings and are your personal property. Employees and self-employed persons can pay up to 4% of their total salary into such a fund and receive an average of 2% in a counter-contribution from the employer. They have a page dedicated to the topic on their website, albeit in Icelandic – see more here: Séreignarsparnaður
Tax free extra savings
Private pension savings, or supplementary savings, are one of the most advantageous forms of savings available, as the premiums are excluded from tax and the return is excluded from capital gains tax. Private pension savings can be used both towards purchase of a first property or to increase disposable income after the age of 60.
Specified private property
This relatively new type of private pension, is separated from voluntary private pension savings and bound in the wage agreements in the general labor market. Employers’ contributions to the pension fund rose to 3.5%, so that the total contribution amounts to 15.5% instead of the previous 12%.
Fund members have the choice of placing this increased contribution from employers in part or in full in the specified private property, or having the premium flowed into mutual insurance for increased rights. The specified private property is not a traditional free private property and is only subject to other laws, but fund members must decide for themselves whether to go this route. Fund members can also choose to go the traditional private pension route.
Frequently asked questions:
What are specified private pension savings?
You have the option of increasing your pension savings by up to 4% tax-free additional contribution, which is accompanied by a contribution of up to 4% from your employer, and these additional percentages are tax-free.
What is gained from specified private pension savings?
Additional savings are your private property – your bank account. These savings are deductible from the tax base, but pension payments are taxed like other earned income.
Can I utilize these savings when purchasing property?
Yes, you may use the private pension savings when buying your first apartment, but also to pay off a mortgage.
SL lífeyrissjóður
Borgartún 29, 105 Reykjavík, Iceland
+354 510 7400
www.sl.is
