including amendments approved at the Annual General Meeting of Gildi on 27/04/2023
Valid from 1 August 2023.
1. Name and domicile of the Fund
1.1. The name of the Fund is Gildi Pension Fund.
The domicile of the Fund and legal venue are in Reykjavík [Iceland].
2.1. The role of the Fund is to secure pensions for its members, their surviving spouses and children in accordance with the provision of these Statutes.
2.2. The Fund operates in accordance with the Act on mandatory pension insurance and the operation of pension funds No. 129/1997. The foundation of the Fund dates back to an agreement made between labour unions and employers of 19 May 1969 and 12 December 1995, as subsequently amended, and the object of the Fund’s Statutes is to secure the minimum rights provided for therein.
2.3. The Fund shall not engage in any activities other than the activities required to perform its role, and no disbursements of funds may be made for any other purpose.
2.4. The Fund is divided into three departments: the Mutual Insurance Department, Specified Personal Savings Department and Private Pension Department. Chapter 22 of these Statutes deals specifically with the Fund’s Specified Personal Savings Department and Chapter 23 deals specifically with the Fund’s Private Pension Department.
3.1. Membership of the Fund is open to all wage earners who have reached 16 years of age before the end of the preceding calendar month and base their contractual employment terms on collective agreements of the labour unions and associations that are affiliated with the Fund, or who are employed in professions where collective agreements of the member organisations of the Fund determine their minimum employment terms, provided that their membership is not otherwise provided for in the collective agreement of an individual member organisation of the organisation in question. Fund members are persons in respect of whom contributions have been paid into the Fund or who are paying or have paid contributions into the Fund, thereby acquiring entitlements.
3.2. The member organisations of the Fund representing employees are Bifreiðastjórafélagið Sleipnir, Efling-stéttarfélag, Félag járniðnaðarmanna á Ísafirði, Félag skipstjórnarmanna, Sjómannafélag Íslands, Sjómannasamband Íslands, Sjómanna- og vélstjórafélag Grindavíkur, VM-Félag vélstjóra og málmtæknimanna, Verkalýðsfélagið Hlíf and Verkalýðsfélag Vestfirðinga; employers are represented by the Confederation of Icelandic Enterprise (SA).
3.3. No one may be refused membership of the Fund for reasons of health, age, marital status, family size or gender.
3.4. A wage earner who becomes a sole operator is permitted to continue his/her participation in the Fund. Also, employers with connections to the Fund’s sphere of operation are permitted membership of the Fund, but the waiting time provided for in Articles 12-14 shall be calculated from the end of the month following the month in which a contribution is received by the Fund for the first time. The same applies to persons who are not bound by collective agreements or whose contractual employment terms are not based on a collective agreement, but nevertheless request membership of the Fund.
3.5. Seamen who would have been entitled to membership of the Seamen’s Pension Fund under the provisions of Act No. 45/1999 have the same right to membership of Gildi Pension Fund, irrespective of other provisions of these Statutes.
3.6. The board of directors of the Fund may grant to Icelandic wage earners working abroad, e.g. seamen employed aboard vessels registered outside Iceland, membership of the Fund, provided always that entitlements accrue only in respect of contributions received by the Fund on their behalf.
3.7. The board of directors of the Fund may permit unions and associations of employers and wage earners affiliated with the Fund to insure their employees with the Fund.
3.8. If a union applies for membership of this Fund the board of directors of the Fund is authorised to grant to its members and persons earning wages based on their accepted wage rates permission to become Fund members. The board of directors of the Fund is also authorised to permit unions and associations who manage contracting on the wages and employment terms of wage earners who are members of the Fund to insure with the Fund those of their employees who are not members of other pension funds.
3.9. The board of directors of the Fund is authorised to negotiate with the boards of other pension funds on their merger with Gildi Pension Fund. The board of directors shall ensure that the rights of Fund members are not curtailed as a result of the merger, and also that they are not improved at the cost of the members of the other funds. Unions in charge of such funds shall be granted full membership of the representative council provided for in Section 5.3. The board of directors of the Fund is also authorised to sell insurance coverage to other pension funds and co-operate with other pension funds regarding individual aspects of insurance coverage. Furthermore, the board of directors is authorised to offer to Fund members and other persons contracts on supplementary insurance coverage and private savings plans in compliance with Act No. 129/1997.
3.10. Contributions and, in consequence, the entitlements arising from them, may be transferred between pension funds when the taking of pension begins. Membership of the Fund is terminated if a Fund member has been paid out his/her entitlements as a lump sum, of if they are transferred to another pension fund in accordance with rules of procedure governing relations between pension funds. The termination of membership shall be notified in writing by member associations of the Fund with six months’ notice with effect from the turn of the year.
4.1. The board of directors of the Fund shall be composed of eight members. Four shall be elected by representatives of Fund members at the annual general meeting, together with two alternates, and four shall be confirmed by the representatives of employers on the representative council based on nominations by the Confederation of Icelandic Employers, together with two alternates. The election term of board members is two years, with half of the board members and their alternates elected annually. The provisions of law on gender ratios shall be observed in the constitution of the board of directors. The mandate of a board member may be withdrawn only if the member is unfit to serve on the Board according to law or the Fund’s Statutes. The nominating entity shall formally communicate to the board of directors of the Fund its reasoned decision to withdraw a mandate, citing the applicable provisions of law, statutes or rules. If the nominating entity withdraws the mandate of a board member, the representative council of that entity shall confirm the decision and nominate a new board member to serve until the next annual general meeting. The nominating entities are, on the one hand, the Confederation of Icelandic Employers and, on the other hand, the wage earners’ nomination committee, as provided in Section 5.5 of the Fund’s Statutes.
4.2. Members of the Pension Fund’s board of directors must be resident in Iceland and of legal majority; they shall be of good repute, they shall never have been deprived of control over their estates, and may not, in the course of the preceding five years, have been convicted of a criminal offence relating to a commercial activity which is punishable under the Criminal Code or legislation on limited liability companies, private limited liability companies, accounting, annual accounts, bankruptcy or public levies. However, board members resident in member states of the European Economic Area are exempt from the residency requirement. In addition to the above requirements, board members shall possess sufficient knowledge and professional experience to be able to carry out their functions in a proper manner. Board members shall carry out their duties with integrity, they shall be able to devote the time needed to discharge the functions required by service on the board and they shall make decisions independently in every individual instance.
4.3. Board members shall not serve for more than eight consecutive years as principal members of the Fund’s board of directors. A person who has served as a principal member for 8 years may not take a seat as a principal member until three years have passed.
4.4. The members of the board of directors shall allocate tasks among themselves. However, representatives of employers and labour unions shall hold the chair of the board alternately for one year at a time. The board shall draw up its own rules of procedure and maintain a record of minutes in which it shall enter all its decisions. A decision is lawful only if supported by five board members. A quorum is achieved at meetings of the board of directors if the meeting is attended by a majority of its members or their alternates. A secret ballot shall be held if requested by one or more board members.
4.5. The board of directors of the Fund is responsible for its governance. The board shall deliberate on all major decisions regarding the policies and activities of the Fund. The board of directors of the Fund shall appoint a managing director and decide on his/her salary and other terms of his/her employment. The board of directors shall plan the Fund’s internal audit and document audit processes, appoint a manager of internal auditing or contract with an independent supervisory body on assuming responsibility for internal auditing. The board of directors shall plan the Fund’s investment and risk strategy, adopt rules on the reporting of information by the managing director to the board regarding operations, contributions, accrual of entitlements and disposition of the Fund's assets. Furthermore, the board shall establish rules of procedure on the securities trading of the Fund, its board of directors and employees and obtain their confirmation from the Financial Supervisory Authority. The board of directors of the Fund shall annually appoint an audit committee to oversee, among other things, accounting, risk management and preparation of the Fund’s annual financial report in accordance with the provisions of Chapter IX of the Act on annual accounts No. 3/2006.
4.6. The board assigns and withdraws signatory powers of the managing director and other employees.
4.7. The managing director of the Fund is responsible for its daily operation in accordance with the policy and decisions of the board of directors. The managing director shall hire the employees of the Fund. The managing director shall exercise the voting rights of the Fund at meetings of limited companies where the Fund holds interests, except as otherwise decided by the board of directors in individual instances. The managing director of the Pension Fund is not eligible to serve as a board member of the Fund. The managing director shall not participate in any business enterprise except with the permission of the board of directors. The eligibility of the managing director is in other respects subject to the provisions of Section 4.2.
4.8. The managing director shall only make decisions which are extraordinary or of major consequence on the basis of a specific decision of the board of directors or pursuant to a plan approved by the board. In the event that it is impossible to bring a major decision before a meeting of the board, the chairman of the board and other members shall be consulted to the extent possible. Such decisions shall subsequently be discussed at the next meeting of the board.
4.9. All major changes in the organisation of the Fund, internal auditing, accounting and financial reporting may only be made by the managing director in consultation with the board of directors and with its approval.
4.10. The managing director is responsible for ensuring that the accounts of the Fund are kept in accordance with statutory law and accepted practices. The managing director shall also observe the investment strategy and lending rules established by the board of directors. At regular meetings the managing director shall submit reports on the Fund’s investments, operation and results. The managing director shall provide the board of directors and auditors with any information that they may request concerning the performance and activities of the Fund.
4.11. Neither board members nor employees may participate in the process of any issue in which they have a personal and substantial interest which could conflict with the interests of the Fund. The same applies to decisions relating to a company in which a board member may have substantial interests as owner, board member or employee, or any other financial interests. Disqualification from participation in the process of individual matters is in other respects subject to the general principles of administrative law. Board members and, as applicable, employees, are required to disclose any circumstances that may cause their disqualification pursuant to the above.
4.12. The board of directors of the Fund, managing director or any other parties authorised to represent the Fund shall not take any action which will clearly have the effect of unduly serving the interests of individual Fund members, companies or other parties beyond the interests of others or at the expense of the Fund. They shall also maintain in confidence any matters that come to their knowledge in the course of their work for the Fund and may concern the interests of individuals or corporations and any other matters that by their nature are confidential. The obligation of confidentiality shall remain in effect even after termination of employment or membership of the board of directors.
4.13. Neither board members nor employees of the Fund shall serve on the boards of business enterprises under the authority of the Fund. However, this does not apply to enterprises established for the purpose of attending to specific aspects of the Fund’s activities, nor to risk capital companies in which the Fund has invested and holds interests. The board of directors of the Fund shall establish a shareholders’ engagement policy outlining in broad terms the Fund’s procedures in trading in the stock market and its position with regard to companies in which it has invested.
5.1. The annual general meeting holds the supreme authority in the affairs of the Fund, except as otherwise provided in these Statutes. All Fund members have the right to attend annual meetings and to speak and submit motions.
5.2. The annual general meeting of the Fund shall be held before the end of April each year. The board of directors may call extraordinary meetings when necessary. The board of directors is required to call a shareholders’ meeting if requested by a member organisation of the Fund in writing, stating the purpose of the meeting. The board of directors shall call a meeting by a written notice to the member organisations with a minimum of four week’s advance notice. Also, the board of directors shall advertise the meeting in a newspaper, on the radio or in another verifiable manner with at least 7 days’ notice.
5.3. A representative council functions within the Pension Fund composed evenly of representatives of associations of wage earners and employers affiliated with the Fund. The member organisations of the Fund nominate their representatives in the Fund's representative council and these representatives exercise the voting rights at the annual general meeting and other meetings of the Fund, acting for the member organisations and in accordance with the provisions of these Statutes. The period of appointment of representatives is three years. In appointing members to the representative council efforts shall be made to ensure that the council reflects the professional and industrial sectors that secure their interests through contributions to the Fund. Unions affiliated with the Fund shall nominate a total of 80 representatives to serve on the Council. The number of representatives of the individual member organisations shall be consistent with the weight of the contributions paid by their members to the Fund, which shall be calculated every other year based on the contributions paid by members of the respective unions in the preceding year; this calculation shall determine the number of representatives of individual member unions/associations serving on the representative council for the following two years. The Confederation of Icelandic Employers shall nominate up to 80 representatives to serve on the council. Nominations to the representative council shall be announced a minimum of 14 days before the end of the current appointment period; appointments take effect at the start of the annual general meeting and remain in effect until the annual general meeting two years later. A member of the representative council may represent two other representatives at meetings of the representative council and at the annual general meeting.
5.4. The board of directors of the Fund shall summon the representative council to a meeting twice a year, in the autumn and prior to the annual general meeting, in order to discuss the affairs of the Fund and to present key indicators on the Fund’s performance and the Fund's investment strategy. The board of directors is authorised to decide to open the autumn meeting of the representative council to Fund members. At the meeting of the representative council prior to the annual general meeting amendments to the articles of association shall also be presented, when applicable, as well as the remuneration policy. Representatives of associations of wage earners shall also confirm nominations from their nomination committee of representatives of Fund Members on the board of directors of the Fund. Also, representatives of employers on the representative council shall confirm the nominations of the Confederation of Icelandic Employers to the board of directors of the Fund.
5.5. No later than three months prior to the annual general meeting, representatives of unions in the representative council shall appoint a committee of at least three members to prepare a proposal on candidates to represent the union representatives on the board of directors and their alternates. The proposal shall, inter alia, take into account the origin of the Fund and have the objective of ensuring that parties with interests have a corresponding involvement in the board of directors. The nomination committee shall draw up its own rules of procedure. The Confederation of Icelandic Employers shall also have in place a nomination committee to prepare the nominations of the Confederation of employers’ representatives on the board of directors and their alternates. These nomination committees shall hold formal consultations in order to ensure that the proposals from each of the two committees will collectively result in a composition of the board of directors that, as a whole, possesses sufficient knowledge and experience to carry out its functions and attend to the affairs of the Pension Fund with efficiency and integrity.
5.6. A committee functions within the Pension Fund on the remuneration of the board of directors to prepare and submit a proposal to the annual general meeting on the salary of the board of directors in the following year. The annual general meeting shall elect three members to the committee. Committee members elected by the annual general meeting shall not be members of the board of directors. The chairman of the board of directors at any time shall also serve on the committee. The remuneration decided by the committee shall reflect the responsibility, expertise, experience and time needed to discharge the board’s functions. One committee member shall be elected by representatives of the unions on the representative council and another by representatives of the associations of employers in the representative council. The third shall be elected alternatively by the representatives of the unions and the representatives of the associations of employers on the council. The representatives of the group that does not appoint the chairman of the board of directors for the following term of election shall elect the third representative.
5.7. Matters shall be decided by force of vote except as otherwise provided in these Statutes. However, a divided ballot may be requested, so that representatives of the associations of employers and unions cast their votes separately, in which case the required majority is needed in both sections of the representative council for a decision to be valid.
5.8. The agenda shall include the following items of business:
6.1. The fiscal year of the Fund shall be the calendar year. Accounts shall be audited by a chartered accountant and the annual financial report shall be prepared in accordance with statutory law, regulations and accepted accounting standards.
7.1. The board of directors of the Fund shall annually have the financial situation of the Mutual Insurance Department of the Fund calculated and the result of the survey shall form a part of the financial statement of the Fund at each turn of the year. The result of the actuarial survey shall account for the expense of the minimum entitlements for which the Fund is liable, in accordance with the provisions of Section 2.2. An account shall also be provided of the expense of the supplementary entitlements that the Fund may grant in excess of the above minimum. The survey shall be carried out by an actuary or another party approved by the Financial Supervisory Authority. The actuarial survey shall be sent to the Financial Supervisory Authority no later than 1 July each year.
7.2. The net assets of the Pension Fund available for the payment of pensions, together with the present value of future contributions, shall be equal to the present value of prospective pensions arising from contributions already paid and future contributions. The estimate of future contributions and future pensions shall be based on the Pension Fund members at the time of reference used in the actuarial survey. The entitlement tables of the Fund shall be reviewed annually and modified if actuarial premises of the Fund so warrant, as further provided in Section 10.2; changes in earned entitlements are subject to the provisions of Sections 7.3 and 7.4.
7.3. If an actuarial survey reveals that the Fund’s assets are more than 10% in excess of its pension liabilities based on accepted actuarial premises and taking into account reasonable prudential viewpoints, the board of directors of the Fund shall, following consultation with an actuary, submit proposals to the annual general meeting for an increase in pension entitlements. The same applies if this difference has exceeded 5% for five consecutive years. The board of directors of the Fund is also authorised, in consultation with the Fund’s actuary and based on accepted actuarial premises, and taking into account reasonable prudential viewpoints, to submit a proposal to the annual general meeting of the Fund to increase the earned entitlements of Fund members. However, the financial position of the Fund, that is to say the balance of assets and liabilities pursuant to an actuarial survey, shall always be positive after any increase in entitlements, both in terms of accrued entitlements and total entitlements. The annual general meeting takes the final decision, and an overview of decisions pursuant to this section is included in Annex B.
7.4. If an actuarial survey reveals that the Fund’s assets fall more than 10% short of its pension liabilities based on accepted actuarial premises and taking into account reasonable prudential viewpoints, the board of directors of the Fund shall, following consultation with an actuary, submit proposals to the annual general meeting for an reduction in pension entitlements, provided that no other means are available to improve the Fund’s financial situation.. The same applies if this difference has exceeded 5% for five consecutive years. The board of directors of the Fund is also authorised, in consultation with the Fund’s actuary and based on accepted actuarial premises, and taking into account reasonable prudential viewpoints, to reduce the accrued entitlements of Fund members. The reduction shall be effected by proportionally equal curtailment of the accrued entitlements of all Fund members, as calculated in accordance with Articles 11-14 of these Statutes. See Annex B.
7.5. If an actuarial survey reveals that the financial situation of the Fund is so insecure as to be untenable, and if it can be assumed, based on actuarial premises, that the Fund’s assets will not cover liabilities assuming the minimum entitlements that the Fund is required to offer, as provided in Section 2.2, the board of directors of the Fund shall call an extraordinary annual general meeting as promptly as possible, and not later than six months from the time that the actuarial conclusion became available. At the meeting, the board of directors of the Fund shall submit proposals on a merger with another mutual fund or a closure of the Fund. Also, the board of directors of the Fund shall submit a proposal regarding which pension fund should secure pension entitlements for Fund members. The proposals shall be subject to the same due process as motions on amendments to the Statutes.
8.1. The board of directors of the Fund shall plan its investment strategy and administer the disposal of its assets in accordance with the strategy. The board of directors is required to invest the Fund’s assets having regard to the best terms on offer at any time, taking into account risk and the long-term liabilities of the Fund. The board of directors of the Fund shall establish a separate investment strategy for each department of the Fund.
8.2. The Fund's investment strategy shall take into account the provisions of law on mandatory pension insurance and the operation of pension funds, currently Chapter VII of Act No. 129/1997, and binding administrative provisions, and the Fund’s investments shall at any time be within the limits established by law and regulations, both as regards substance and form, and within the limits set by the investment strategy.
8.3. The board of directors of the Fund shall plan an investment strategy setting criteria regarding the extent to which the Fund should invest in individual securities. The strategy shall also provide for targets regarding distribution of assets, duration of claims, currency composition, asset liquidity and other criteria that, in the opinion of the board of directors of the Fund, most accurately reflect its investment strategy. The investment strategy shall be presented at the Fund’s annual general meeting, see Section 5.5.4.
8.4. The Fund is permitted to own real property for its offices.
9.1. The contribution to the Mutual Insurance Department of the Pension Fund shall, in accordance with a collective agreement or employment contract, be no less than 12% of the Fund member’s employment income from 16 to 70 years of ages, as specified in Sections 9.2 or 9.3, and form entitlements to mutual insurance coverage in accordance with the provisions of the Fund’s Statutes. A Fund member may dispose of contributions in excess of 12% of the contribution base into the Specified Personal Savings Department, if provided for in a collective agreement or employment contract. The maximum of the proportion of the contribution that will be paid into the mutual Insurance department of the Pension Fund shall be equal to the highest amount negotiated in the collective agreement of the member organisations of the Fund. A Fund member may increase or decrease the contribution to mutual Insurance coverage from the amount provided for in a collective agreement or employment contract within the above limits, provided that a separate written contract is made between the Fund member and the Pension Fund. The Pension Fund decides and publishes the terms of such contracts.
9.2. The contribution pursuant to Section 9.1 shall be calculated from the total of wages paid plus remuneration for any type of work, task or service. The contribution base shall comprise all types of wages or compensation for work which is subject to income tax pursuant to the first paragraph of point 1 of Section A, Article 7, of Act No. 75/1981 on income tax and net worth tax. The contribution base shall not, however, include benefits paid in kind, such as clothing, food or accommodation, or payments which are intended to cover expenditures, e.g. vehicle allowances, per diem payments and food allowances. Furthermore, retirement and pension benefits paid by the Social Insurance Administration or pension funds, other benefits paid by the Social Insurance Administration, accident and sickness benefits paid by the health insurance funds of trade unions, and benefits paid by insurance companies for loss of earnings resulting from injury shall be excluded from the contribution base. The contribution base shall include unemployment benefits, as provided for in the Unemployment Insurance Act, and parental leave payments according to the Parental Leave Act.
9.3. The contribution base of an individual who is employed in his/her own business operations or self-employed shall be equivalent to an amount provided for in the second Paragraph of Point 1 of Section A, Article 7, of Act No. 90/2003 on income tax and net worth tax, cf. Article 58 of the same Act.. The proportion of the contribution is subject to Section 9.1.
9.4. Employers are required to withhold their employees’ contributions and submit them monthly together with their own share of the contributions. The due date of contribution payments for each month is the 10th day of the following month. If a payment is not made within one month from the end of the contribution payment period default interest shall accrue in accordance with Act No. 38/2001 on interest and indexation. Employers and persons operating their own businesses must notify the Pension Fund if they are no longer responsible for the submission of pension fund contributions due to the termination of their activities or if their employees have left their employment. Employers and self-employed persons shall submit a remittance form with the contribution stating, among other things, the contribution proportions and contributions of each person pursuant to their respective collective agreements or employment contracts, together with the contribution proportion and contribution that should accrue to mutual insurance. The Pension Fund establishes and publishes rules on the form of such remittance forms. In the absence of information to the contrary, the collection of contributions shall assume the employee's proportion as 4% and the employer's proportion as the remainder, the minimum being 8%.
9.5. Fund members are not liable for any obligations of the Fund beyond the payment of their contributions.
9.6. Contributions in respect of Fund members that an employer has demonstrably withheld but not submitted to the Fund, together with the matching contribution of the employer shall, notwithstanding the default, accrue to entitlements for the benefit of the member in question when pensions are allocated, provided that the Fund was aware of the default, cf. Sections 9.7 and 9.9. However, the Fund is not liable for entitlements of Fund members relating to contributions lost as a result of bankruptcy and for which the Wage Guarantee Fund is not liable in accordance with Articles 6 and 10 of Act No. 88/2003. (These are board members and managers of a bankrupt enterprise, their spouses and relatives, as further provided in the rules of the Wage Guarantee Fund).
9.7. Twice a year, in March and September, Fund members shall be sent a statement of contributions paid in their favour. The statement shall be accompanied by a request to Fund members to comment promptly in the event of any shortfalls in submissions of contributions. The Fund is permitted to send statements in electronic form to Fund members if they so request or when permitted by law or administrative provisions. If no comments have been received from a Fund member, supported by wage slips, within 60 days of the date of a statement, and the Fund was not aware of the contribution claim, the Fund is only liable for entitlements based on such contributions to the extent that they are paid in. The Pension Fund shall concurrently with the statement, and no less frequently than once each year, send information on accrued and anticipated pension rights of Fund members, on the operation and financial situation of the Fund, and on amendments made to its Statutes. The same information shall be sent to Fund members who have reached pension age.
9.8. A final warning shall be sent to employers if contributions pursuant to submitted remittance forms have been in default for three months from the final due date. Formal collection measures shall begin within 15 days of the remittance of the final warning, or earlier if there is reason to believe that the contribution claim is insecure.
9.9. Contributions in default which can be substantiated by means of pay statements shall be collected in the same manner as employers’ remittance forms. A final warning to employers shall be sent within 90 days of the date of the statement provided for in Section 9.7. The Pension Fund is permitted to base its collection measures on estimates of unpaid contributions if the employer in question has not submitted remittance forms to the Fund for the period in question. Collection is in other respects subject to Section 9.8.
9.10. All payments from employers, whether submitted with a new remittance form or by other means, shall accrue to the payment of the earliest unpaid contributions and the employer’s default interest and create entitlements accordingly. However, the board of directors of the Fund is permitted to deviate from this rule in cases when formal measures to collect contributions in default have been initiated, as provided in Section 9.8, for a specific period, and adequate security has been received for payment of contributions, default interest and collection costs for that period. Also, where legislation provides otherwise, as in the case of procedure in the course of a moratorium on an employer’s debts. A remittance form is regarded as unpaid until a sufficient payment is made to cover the remittance form in full and any accrued default interest on the debt.
9.11. On the basis of an agreement between a Fund member and his or her spouse, a Fund member may decide that half of his or her contributions pursuant to Section 9.1 should accrue to form independent pension entitlements for his or her spouse, see Section 11.7(b). This division of contributions shall be ceased at the request of the Fund member, provided that the member presents documents confirming that his or her joint estate with his or her spouse have been severed or that the parties have entered into a new agreement.
9.12. The allocation each year to even out the disability burden of the pension funds, as provided in Act No. 113/1990 on payroll tax, shall be allotted in accordance with the provisions of Article 19 of Regulation No. 391/1998 on mandatory pension insurance and the operation of pension funds, so that the accrual of new entitlements and pensions in respect of deferred entitlements increase in the following year, as further specified here.
a) The entitlement accrual of Fund members shall be increased by 3.6% of their contributions. Entitlements pursuant to this provision shall be calculated in full in accordance with rules on age-dependent accrual. These entitlements shall be identified separately in the Fund’s entitlement accounts; they do not confer a right to projection.
b) A supplementary pension shall be paid to pensioners other than recipients of a child pension amounting to 3.0% of their pensions. The supplementary pension shall be paid monthly, like other pensions. This supplementary pension shall be marked separately in the Fund’s entitlement accounts.
The above allotment to increased accrual of entitlements and pension payments shall at a maximum correspond to the disability allocation of the year at any time. The Fund’s actuary shall annually assess the liabilities of the Fund under the above rule based on the disability allocation of the year and anticipated contributions and pension payments in the following year and submit a proposal on a change in the percentage of additional accrual and pension if the assessment so warrants. The board of directors of the Fund shall than submit a proposal on amendments to the Fund’s Statutes to the Fund’s annual general meeting to ensure that the disability allocation will cover liabilities under points (a) and (b) above.
10.1. With the payment of contributions a Fund member earns entitlements to an old-age and disability pension and for his or her spouse an entitlement to spouse pension and child pension as provided in Articles 11-14 and in accordance with the entitlement tables which are included in Annex A to these Statutes and constitute a part thereof. The entitlements of Fund members to a pension are calculated in Icelandic krónur (ISK), with the entitlements determined on the basis of the contribution paid into the Pension Fund each time. The accrual of entitlements is determined by the age of a Fund member at the end of the salary month from which a contribution is paid into the Fund, subject to the special rule laid down in Section 10.1. The entitlements are index-linked and adjusted in line with changes in the consumer price index from the salary month in respect of which a contribution is paid. The principal actuarial assumptions on which the entitlement tables of the Fund are based are shown in Annex A. Minimum insurance coverage is based on the assumption that contributions begin at the age of 20 years.
10.2. If the actuarial assumptions of the Fund change to the extent where the Fund’s actuary sees reason to alter the tables, then the actuary shall prepare a proposal for new entitlement tables that reflect the changed assumptions for submission to the Board of Directors of the Fund. If the Board of Directors approves that proposal it shall be placed before the next annual general meeting or extraordinary annual general meeting for confirmation. Subject to compliance with the provisions of law and these Statutes the new entitlement table on the accrual of entitlements in the Fund in accordance with the resolution of the annual general meeting or extraordinary annual general meeting to such effect.
10.3.1. A Fund member who holds entitlements in the Fund at year-end 2004 is permitted to pay contributions into the Fund up to a specified maximum with an even accrual of entitlements over as many months as the member had paid contributions to the Fund prior to the age of 42 at year-end 2004. If the member has paid contributions for a full five years over the period in question the member is entitled to pay up to the reference contribution in even accrual until the age of 67. This even accrual is based on the average entitlement accrual of the ages 25 to and including 64 according to Table I in Annex A, where the average is listed separately. The maximum contribution toward even accrual each calendar year, the reference contribution, shall be decided for each Fund member who is at the age of 25 to and including 66, equal in amount to the contribution he or she paid into the Fund in 2003, or the last year a contribution was received by the Fund for his or her benefit, if earlier. However, the reference contribution shall not take into account payments of contributions in excess of 10% of the contribution base. If payments of contributions in that year do not reflect normal payments, e.g. as a result of interruptions in employment or as a result of payments having ceased in the year, the calculation of the reference contribution shall, following an application by the Fund member, be based on contribution payments in respect of an earlier year that the board of directors of the Fund regards as giving a fair view of the regular payment contributions of the Fund member. The reference contribution pursuant to the above shall be adjusted in line with changes in the consumer price index from the reference year to the year of payment each given time.
10.3.2. All contributions received by the Fund in respect of a Fund member who is 25 years of age or older at year-end 2004 and has a defined reference contribution in accordance with the above shall be entered in an even entitlement accrual until the reference contribution is reached or the calculated contribution payment period is completed. The Fund shall specifically take care that the entitlement accrual of persons who are not entitled to an even entitlement accrual until the age of 67 pursuant to Section 10.3.1 is in accordance with the accrual rules that confer greater entitlements over the period in question. A contribution that is received in excess of the above reference contribution forms entitlements in accordance with the Fund’s age-dependent entitlement table. When all the contributions of the year have been received in respect of a Fund member possessing a defined reference contribution the contribution shall be distributed over individual months in the same proportions as the contributions that have been received. The part of the premiums that is in excess of the reference contribution shall earn entitlements for the member in accordance with Table I in Annex A.
10.3.3. In projecting entitlements in accordance with the provisions of Articles 12-14, an even accrual shall be assumed in accordance with the share of the Fund member’s reference contribution in the contributions that formed the basis of the projection. Projection of the reference contribution of Fund members shall be linked to the consumer price index as it stands in the reference month of the projection.
10.3.4. The Pension Fund shall inform Fund members of the calculation of the reference contribution for even entitlement accrual pursuant to the above within three months from the time that the member first pays a contribution to the Fund after 1 June 2005. If a Fund member is of the opinion that the reference year does not give a fair view of his or her normal contribution payments he or she may submit a request to the board of directors of the Fund for another year to be used as a basis for the calculation of the reference contribution. The request for a review of the reference contribution shall be received by the Fund at the latest nine months after the Fund member received a notice of the calculation of the reference contribution.
10.3.5. A reference contribution shall not be calculated for members who are under the age of 25 or over the age of 70 on 1 June 2005. A Fund member can at any time decide that his or her contribution should accrue to entitlements in accordance with the age-dependent entitlement table. A decision by a Fund member to such effect shall take effect from the beginning of the year in which the notice is received by the Fund; the decision is irrevocable. The right to even accrual pursuant to the provisions of this chapter applies from the entry into effect of these Statutes, or from the time that a member is first permitted to contribute to the Fund in respect of wages for work in his or her profession and shall lapse if it is not exercised without reasonable explanation in the opinion of the board of directors.
10.3.6. The board of directors of the Fund is authorised to enter into an agreement with other pension funds in the Icelandic Pension Funds Association that have used a system of even accrual of entitlements in 2003 on a mutual recognition of contribution payments for the calculation of a reference contribution pursuant to the above. Also, the Fund is permitted to maintain a harmonised computer record of rights to even accrual and to decide how this right should be divided if contributions are paid into more than one pension fund.
10.4. Accrued entitlements, as defined in Sections 11-14 and calculated in accordance with Sections 10.2 and 10.3, shall be preserved in accordance with the rules that are current at any time, so that pension payments are in line with the accrued entitlements of each entitlement period. Projection shall at each given time be in accordance with the rules that apply when the right to a pension became active. The aggregate of pension entitlements is the sum of accrued pension entitlements and projected pension entitlements if such entitlements have been decided. Projected pension entitlements are not counted with accrued entitlements except to the extent that they have accrued from the time of decision on the projection, as provided in Sections 12.11 (a) and 13.6 (a), in which case the projected share will be curtailed accordingly. When the board of directors decides on an increase in entitlements such entitlements shall be segregated from other entitlements. An increase in entitlements is not included in projections, but counts fully in accrued entitlements. In the event of a curtailment of accrued entitlements of Fund members the procedure shall be the same as in the case of increases in entitlements, with the exception that the curtailment is deducted from accrued entitlements. Changes in entitlements in accordance with the above shall be entered in the Fund’s entitlement accounts as from the last month of the period covered by an actuarial survey pursuant to Chapter 7 of these Statutes. An increase or decrease in pension payments can only take effect as of the month after the confirmation of the Ministry of Finance has been obtained.
10.5. Accrued and deferred pension entitlements of members of the Framsýn Pension Fund and Seamen’s Pension Fund as at 31 May 2005 shall be preserved in accordance with the entitlement rules that applied on that date in the respective pension funds. The same applies to deferred pension entitlements in the West Fjords Pension Fund as at 31/12/2014. The effect of deferral or bringing forward of the amount of a pension pursuant to the above shall be subject to the principle expressed in the second sentence of Section 11.2 and 11.3, as shown in tables V and VI in Annex A.
10.6. The Fund places special emphasis on old age pension insurance and reserves the authority to defend such entitlements over and above other entitlements when reviewing the entitlement provisions of these Statutes.
11.1. A Fund member aged 60 to 80 years possessing entitlements in the Fund pursuant to Article 10 shall be entitled to a life-long old age pension. A Fund member who begins taking an old age pension at the age of 67 shall receive entitlements in accordance with Table I.
11.2. When a Fund member begins taking an old age pension after the age of 67 the amount of the old age pension shall increase in line with Table I, as shown in Table III, for each month that passes from the age of 67 until the taking of the old age pension begins. The increase in the old age pension entitlements is based on the assumption that the value of the old age pension until death will be the same as for those who begin taking an old age pension at the age of 67 based on the actuarial premises of the Fund. In this way, a Fund member can defer the taking of an old age pension up to the age of 80 years against a permanent increase of monthly old age pension payments.
11.3. When a Fund member begins taking an old age pension before the age of 67 the amount of the old age pension shall decrease in line with Table I, as shown in Table II, for each month remaining until the age of 67 when the taking of the old age pension begins. The reduction in the old age pension entitlements is based on the assumption that the value of the old age pension until death will be the same as for those who begin taking an old age pension at the age of 67 based on the actuarial premises of the Fund.
11.4. Taking an old age pension before the age of 67 by a Fund member represents a final arrangement of old age and disability pension entitlements, and the Fund member then has no independent entitlement to a disability pension thereafter. If the Fund member has earned an additional entitlement to an old age pension by paying contributions after beginning to take a pension, a new determination shall be made of his or her old age pension if the member has lost his or her ability to work by 50% or more.
11.5. At the age of 70, 75 and 80 years Fund members who have not begun taking an old-age pension shall be sent information regarding their entitlements and the procedure for application for the entitlements.
11.6. A Fund member who has not begun to take an old age pension from the Fund may decide to begin taking half an old age pension at any time after reaching the age of 60 years, in which case he or she shall be regarded as having exercised that part of his or her old age pension entitlements in a final manner, as described in Section 11.4. Section 11.3 shall apply to the part that is disposed of before the age of 67 years. Section 11.2 shall apply to the deferred part after the age of 67 years.
11.7. Old age pensions are paid as a fixed monthly amount until death based on accrued entitlements. The entitlement to an old-age pension lapses on the decease of the Fund member.
11.8. A Fund member may decide to divide his or her pension entitlements between himself/herself and his or her spouse pursuant to Article 14 of Act No. 129/1997 on mandatory pension insurance and the operation of pension funds:
a) so that up to a half of his or her old age pension entitlements shall accrue to independent old age pension entitlements in favour of his or her spouse or ex-spouse, in which case the Fund member’s balance shall be reduced correspondingly. This decision shall be made before the taking of a pension begins, but no later than before the age of 65 and then subject to the condition that the member’s life expectancy has not been reduced by sickness or for reasons of health. The total liabilities of the Pension Fund shall not be increased by such a decision of the Fund member. This division is not permitted except in the case of a reciprocal division;
b) so that up to one half of contributions on the Fund member's behalf which are used to form old-age pension entitlements shall be used to form independent entitlements for his/her spouse. In the disposal of contributions in respect of an old age pension, it shall be understood that the contribution base of the Fund member has been divided between the member and his/her spouse in the same manner as the contribution. The Fund member's disability and spouse pension entitlements will continue to be based on an undivided contribution base. This division is not permitted except in the case of a reciprocal division;
c) so that up to one-half of old-age pension payments accruing to the Fund member shall be paid to his/her spouse or former spouse. The pension fund concerned shall in such case divide payments in accordance with the decision by the Fund member, but they shall cease upon his/her demise. In the event of the decease of the spouse or ex-spouse taking such payments before the Fund member the full payments shall accrue to the Fund member.
12.1. A Fund member who suffers a loss of ability assessed at 50% disability or more is entitled to a disability pension in line with accrued entitlements pursuant to Article 10 and the further terms of this chapter. In addition to accrued entitlements according to the above, a Fund member is entitled to a disability pension based on a projection of what his or her entitlements would have been had payments of contributions continued, all in accordance with the further terms of this chapter. The conditions for the entitlement to projection are that the Fund member:
a) has paid contributions to the Fund for no less than three of the preceding four calendar years and no less than ISK 60,000 in each of those three years. If the Fund member has been in part-time employment over that period it shall be assumed that the minimum contribution was ISK 40,000;
b) has paid contributions to the Fund for no less than six months of the preceding twelve months;
c) has suffered a loss of income as a result of the loss of ability;
d) was not himself/herself responsible for the loss of ability through excessive use of alcohol, pharmaceuticals or drugs.
If a Fund member has changed jobs and begun for that reason to pay contributions to the Fund in the 24 months preceding the loss of ability, no entitlement to projection is created in the Fund if the change of jobs can be traced to deteriorating health that led to the loss of ability.
12.2. If there are special circumstances, such as the age of the Fund member, his/her residence abroad or study, that had the effect that he/she was unable to meet the conditions of Section 12.1, the board of directors of the Fund may shorten the required period to the two preceding calendar years, provided that it is assured that the cause of the disability cannot be traced to a time prior to the loss of ability. However, in the event that the right to projection earned by a Fund member lapses as a result of temporary absence from the labour market for up to 24 months owing to work abroad, study, leave of absence, maternity/paternity leave, or comparable reasons, his/her right to projection shall become effective once more after six months from the time that he/she resumes work and payment of contributions to the Fund.
12.3. The right to a disability pension is only established if the Fund Member has suffered a loss of income due to the loss of ability. The aggregate of a disability pension and child pension according to Article 14.4 shall never exceed the loss of income demonstrably suffered by the Fund member as a result of the disability. In determining whether any loss of income has occurred, the Fund Member shall be allocated a reference income which shall be the average of Fund members’ income in the last four calendar years preceding the loss of ability as provided in point (a) of Section 12.6 on projection. The average of the income of the three calendar years preceding the disability may be used as a basis in the case of Fund members who have been awarded a disability pension prior to 1 January 2006, see also point (a) of Section 12.6. From the date of determination, the reference income shall be adjusted in line with changes in the wage index. In calculating loss of income, account shall be taken of the disability pensioner’s employment income, pension payments and benefits received from Social Security and other pension funds and benefits received under collective agreements as a result of the disability. The decision announcing the pension shall state what employment income was used in the calculations, so that the Fund member is aware of the income level on which the reduction in disability benefits is based. Disability pensioners are required to provide to the Fund information on their declared taxable income if so requested. Suspending or cancelling pension payments is permitted if a Fund member does not supply the requested information.
12.4. The percentage of disability and the time of its onset shall be determined on the basis of a disability assessment by the Fund’s medical officer in accordance with rules on medical disability assessment following receipt of a medical history and the past ability to work of Fund members. The assessment of loss of ability to work shall be based on the changes in the health of a Fund member after he or she began paying contributions to the Fund. For the first three years following the onset of the disability the assessment shall mainly be based on the impaired ability of the Fund member to perform in the work he/she has had and is associated with his/her Fund membership. Following this period the loss of ability shall be assessed again with regard to inability of the Fund member to engage in general work, new health information and the result of rehabilitation. The loss of ability shall be re-assessed as the board of directors sees fit.
12.5. When the conditions of Section 12.1 have been fulfilled the maximum disability pension shall be based on the accrued pension entitlement pursuant to Article 10, in addition to a pension corresponding to the entitlements that the Fund member may be assumed to have earned through contributions paid in to the age of 65, calculated in accordance with Section 12.6. If a Fund member is also entitled to a disability pension from another Fund, he/she shall only receive a pension from this Fund for the future if he/she last paid contributions to this Fund, subject, however, to the provisions of an agreement on relations between pension funds.
12.6. If a Fund member who has not reached the age of 65 years when he/she suffers a loss of ability is entitled to projection of his/her entitlements pursuant to Section 12.5, the projection shall be conducted as follows:
a) The average of the contributions of the Fund member over the four calendar years preceding the loss of ability is calculated. If the board of directors of the Fund has reasonable grounds to believe that this four-year average does not reflect normal payments the board may base the calculation on the contributions over the past eight years. In the calculation of the average contribution for this period account shall not be taken of the year of the lowest contributions in respect of the Fund member, nor of the year of the highest contributions, and the average contribution shall therefore be calculated based on the six years that remain. If the Fund member has contributed for less than eight years the calculation shall be based on the actual number of years. The pension entitlement of Fund members in respect of projection shall be determined as equal to the entitlement that this average contribution, paid to the age of 65, would have conferred on the member according to Table I in Annex A. If the average contribution amounts to more than ISK 320,000 the projection shall be based on the average for up to 10 years and subsequently, to the age of 65, an annual contribution of ISK 320,000 shall be assumed.
b) If a Fund member has, prior to the loss of ability, left the employment on which his or her contributions were based, so that the past income history does not, in the opinion of the board of directors, give a reliable indication of his or her loss of income in the future, the board of directors may base its assessment of loss of income pursuant to Section 12.5 on the estimated future income of the applicant in a new job by half against the calculation pursuant to point (a), which will then have a 50% weight in the calculation of the reference income for projection.
c) Where payments of contributions to the Fund have been so sparse that they have lapsed or amounted to less than ISK 42,000 for more than one calendar year following the end of the year when the Fund member reached the age of 25 years, the period of projection shall be shortened by the proportion between the number of calendar years when annual contributions have been lower than 42,000 and the number of calendar years from the age of 25 years up to the time of loss of ability. The same applies if sparse payments of contributions are due to an evasion from the obligation to contribute to the Pension Fund.
12.7. The disability pension is the same percentage of the maximum disability pension as the assessed percentage of disability.
12.8. Disability pension is not paid for the first three months following loss of ability. No disability pension is paid if the loss of ability is of shorter duration than six months.
12.9. A disabled person who applies for a disability pension from the Fund, or receives such a pension, is required to provide the Fund with all information relating to his/her health and income from employment necessary to determine his/her right to a pension and, if necessary, to undergo a medical examination by the Fund’s medical officer. If satisfactory documentation and information are not received from the Fund member, and if the member fails to observe the instructions of the Fund to such effect, his/her application shall be dismissed. On the recommendation of the medical officer, the condition may be set for payment of a disability pension that the Fund member undergo rehabilitation which could lead to his/her improved health, provided that such rehabilitation is available and that the member’s circumstances permit him/her to take advantage of the rehabilitation. A re-assessment shall be conducted of the loss of ability following the completion of the rehabilitation.
12.10. In evaluating an application for a disability pension means shall be sought of supporting the member’s rehabilitation to enable him/her to regain his/her ability to engage in income-generating activities in line with his/her ability and fitness for work. The Fund’s medical officer or, as applicable, another expert service provider selected by the Fund, shall assess whether it is likely that organised vocational rehabilitation will return results and subsequently plan the rehabilitation and its scope. The Fund shall then decide on a rehabilitation allowance for the applicant which is equal to the disability pension that he/she was entitled to under the provisions of this chapter of the Fund’s Statutes. If a rehabilitation allowance is awarded it shall be awarded for a minimum of six months at a time and for up to three consecutive years if the rehabilitation has not returned the intended result earlier. In special circumstances it is permitted to extend the rehabilitation period by up to two years if the Fund, on the recommendation of the medical officer, is of the opinion that progress may still be achieved with continued rehabilitation. The wage income of a Fund member who is participating in vocational rehabilitation shall not curtail an awarded rehabilitation allowance, provided that his/her total income over the rehabilitation period does not exceed his/her lost income, cf. Section 12.3. Re-evaluation of the loss of ability shall be conducted as warranted by the results of the rehabilitation. If the Fund, on the recommendation of the Fund’s medical officer, is of the opinion that it is not to be expected that a Fund member’s loss of ability will be recovered to the extent where the Fund member regains the ability to work, in full or in part, a disability pension shall be awarded in place of the rehabilitation allowance.
If a Fund member refuses to participate in rehabilitation, or does not engage in the rehabilitation in a satisfactory manner, the Fund may cancel payments of a rehabilitation allowance under this provision. A disability pension will only be awarded if rehabilitation is not likely to result in increased ability to work, in the opinion of the Fund's medical officer.
12.11. The board of directors of the Fund shall reduce or discontinue the disability pensions of pensioners who recover their ability to work in part or in full. In the same manner, the board is required to increase the disability pension if the disability increases significantly, without self-infliction, from the time of previous assessments, provided that the Fund member has, from the time the disability increased, not been employed in a post that provided him/her with pension entitlements in another pension Fund.
12.12. A disability pension shall lapse at the age of 67, and also if ability to work increases or income increases so that the conditions of Section 12.1 are no longer fulfilled. The accrued entitlements of disability pensioners shall at any time amount to the accrued entitlements at the first decision on disability, in addition to entitlements in respect of:
a) projected entitlements in proportion to the percentage of the disability pension of the maximum disability pension as it has been at any time;
b) increase or curtailment entitlements that may have been allocated after the taking of a disability pension began;
c) entitlements that the disability pensioner may have earned after the decision on disability.
Deductible from the old age pension of a Fund member, so calculated, is also any old age pension in accordance with Section 11.7 that the member has waived (division of old age pension entitlements).
13.1. Where a Fund member dies, who was the recipient of an old age or disability pension from the Fund, or had contributed to the Fund for at least 24 months out of the preceding 36 months or for six months out of the twelve months preceding the decease, and is survived by a spouse, the surviving spouse is entitled to a pension from the Fund.
13.2. An uncurtailed spouse pension according to Section 13.6 shall always be paid to a surviving spouse for a minimum of 36 months, and subsequently half a pension for up to an additional 24 months, provided that their joint estate has not been dissolved prior to the decease.
13.3. However, the surviving spouse shall always be paid a spouse pension until the youngest child supported by the Fund member reaches 20 years of age, provided that the child is supported by the spouse.
13.4. If a spouse has at least a 50% disability, a spouse pension shall be paid for as long as the disability persists, provided the spouse is under the age of 67.
13.5. For the purposes of this Article, a spouse is defined as the person who at the time of demise was united in marriage or co-habitation with the deceased Fund member, provided that their joint estate has not been dissolved prior to the demise of the Fund member. Co-habitation refers to the co-habitation of two individuals who live together and have done so for a minimum of two years in a union corresponding to marriage and have a jointly registered domicile. The same applies if the co-habitation has lasted for a shorter time if the co-habitants have a child together or if the woman is pregnant. The entitlement to a spouse pension lapses if the spouse remarries, enters into co-habitation corresponding to marriage or enters into a registered partnership.
13.6. A spouse pension at any time shall amount to 50% of the old age pension or disability pension of the Fund member, whichever gives the higher entitlement after death. If the demise simultaneously entitles the surviving spouse to a pension from another fund, he/she shall only have a right to a permanent pension from this Fund if contributions were last paid to this Fund. The accrued entitlements of pensioned spouses shall at any time correspond to the entitlements accrued at the time of the award of a spouse pension, in addition to entitlements in respect of:
a) projected entitlements in proportion to the percentage of the spouse pension of the maximum spouse pension as it has been at any time;
b) increase or curtailment entitlements that may have been allocated after the taking of a spouse pension began;
c) the deceased having been the recipient of a disability pension from the Fund, in which case any entitlements that the disability pensioner may have earned after the determination of disability shall also be added.
14.1.1. In the event of the demise of a Fund member, the member’s children and adopted children under the age of 18 are entitled to a child pension from the Fund as further provided in this chapter, provided that the deceased has:
a) paid contributions to the Fund for 24 out of the 36 months preceding the decease or six months out of the preceding 12, or
b) taken an old age pension or disability pension from the Fund amounting to a minimum of ISK 10,000 per month.
In assessing whether the above conditions are fulfilled, the board of directors should take into account the substantive rule of Section 12.2, mutatis mutandis.
14.1.2. A child pension is also paid in respect of the children of a Fund member who is taking a disability pension from the Fund, provided that they are born or adopted before the loss of ability or in the 12 subsequent months. In the event that a Fund member’s disability is assessed at under 100%, the child pension shall be proportionally lower. A child pension paid in respect of the disability of a Fund member does not lapse if the Fund member reaches pension age.
14.1.3. If a Fund member has, during the reference period pursuant to Section 14.1.1, paid a contribution from a very low contribution base, ISK 50,000 or less, the child pension shall be reduced proportionally until it lapses at the point where the contribution base amounted to less than a half of the above reference. In the same manner, the child pension shall be reduced for the children of old age or disability pensioners if their entitlements are so limited that the pension amounts to less than ISK 20,000 per month, and payments of child pensions shall lapse if the old age or disability pension of the parent is less than ISK 10,000 per month.
14.1.4. If the death of the Fund member also entitles the children to a pension from another pension fund, the payment of a pension from this Fund shall be subject to the condition that the Fund member last paid contributions to this Fund.
14.2. The full pension paid in respect of the child of a disability pensioner is ISK 5,500 per month. The pension paid in respect of each child of a deceased Fund member is ISK 7,500 per month. These amounts shall be adjusted based on changes in the consumer price index from the base index of 173.5 points.
14.3. Foster children and stepchildren whom the Fund member has supported in part or in full shall be entitled to a child pension. Pension payments by the Fund to such children shall be the same as in the case of natural or adopted children. On the adoption of a child of foreign nationality that is domiciled abroad, the time limits according to this chapter shall be referenced to the date of issue of a valid approval or preliminary approval of the Ministry of Justice instead of the date of the adoption permit.
14.4. Child pensions are paid to the supporter of the child until the child reaches the age of 18.
15.1. In the event that wage payments to a Fund member lapse as a result of illness the Fund member shall not earn entitlements while that remains the situation. Periods of time when payments of contributions have demonstrably lapsed for these reasons shall not count when determining whether conditions regarding time of contributions have been fulfilled.
15.2. The right to an old age, disability or spouse pension shall not lapse when Fund member ceases paying contributions. In such an event, the right is based only on accrued, deferred entitlements; see, however, Section 15.1.
16.1. The contributions paid by foreign nationals may be refunded on their departure from Iceland, provided that such refunding is not prohibited under any international agreements to which Iceland is a party. It is permitted to deduct from a refunded contribution, with interest added, any cost of insurance coverage enjoyed by the Fund member and administration cost in accordance with actuarial criteria. The refunding of contributions paid by citizens of other member states of the European Economic Area (EEA) is prohibited. With the refunding to Fund members under this Article all claims of the member in question against the Fund relating to the refunded contributions shall lapse.
16.2. Contributions paid to the Fund in respect of persons at or over the age of 70 years shall accrue to the Personal Savings Department in the name of the Fund member and be deposited in the investment programme of the Fund carrying the least risk at any time, unless the Fund member decides on another investment programme. Both the contribution of the Fund member and the counter-contribution of the employer shall be deposited in the same manner. The Fund member in question shall be notified of such arrangement in advance. Payments out of the Fund shall be subject to the general provisions of the Personal Savings Department. Fund members and employers shall be reimbursed their respective contributions that are paid into the Fund in respect of persons under the age of 16. Such reimbursement shall take place at a minimum twice a year.
17.1. The board of directors of the Fund is permitted to enter into agreements with other pension funds regarding the arrangement of transfers of entitlements etc. In such agreements deviations are permitted from the waiting periods and benefit provisions of these Statutes, in order to prevent any lapse of entitlements when a Fund member changes employment and duplicated assurance of entitlements that are not based on a past contribution period. Furthermore, it is permitted to decide that independent entitlements in individual funds should not in the aggregate exceed the entitlements that would accrue in one and the same fund. However, such agreements are not binding for the Fund until they have been approved by the Icelandic Federation of Labour and the Confederation of Icelandic Employers and confirmed by the Minister where such confirmation is required.
18.1. Pension payments out of the Fund are decided on the basis of applications filed on application forms provided by the Fund. An applicant is required to provide the Fund with all the information necessary for the Fund to decide on a pension in accordance with the entitlements of the Fund member under these Statutes. If an applicant does not provide the required information the Fund should dismiss the application. Also, pensioners are required to inform the Fund of any changes in their circumstances to the extent that they may affect entitlements to the payment of pensions or their amount. These matters shall be noted in a notice sent to the applicant concerning the determination of his/her pension and on pension statements.
18.2. If an applicant for a pension knowingly submits false information intended to increase his or her pension payment in excess of the payments he or she is entitled to, this may lead to a loss of entitlement. The same applies if a pensioner knowingly withholds from the Fund any changes in circumstances that are relevant to his or her entitlement to a pension.
18.3. A pension is paid monthly in arrears, for the first time in the month following the month when the right to a pension was established and for the last time in the month when the right to a pension ceases. However, the board of directors is not required to award a disability pension more than two years retroactively, calculated from the beginning of the month when an application was received by the Fund. An award so determined shall then be based on rules of entitlement as they stood at the time in question and the pension on the price level of each period. No interest is paid on pension payments. However, a pension pursuant to an application for a pension prior to the general pension age, see Sections 11.3 and 10.5, shall first be paid from the beginning of the month when the application is received by the Fund. (The provisions of this Article will take effect on 1 January 2007).
18.4. Where a pension payment does not come to an amount corresponding to at least ISK 2,500, and it is apparent that there will be no combination with other entitlements, the board of directors of the Fund may make the payment in a lump sum with the amount will be based on the actuarial criteria of the Fund on the date of payment.
18.5. Where these Statutes specify amounts in Icelandic krónur (ISK), their value shall be based on the value of the consumer price index of 230, and amounts shall be adjusted monthly in line with changes in the index, except where otherwise stated in the section in question.
19.1. An entitlement to a pension cannot be assigned or pledged.
20.1. Procedure in disputes between Fund members and the Fund is subject to the provisions of the Administrative Procedure Act No. 37/1993, as applicable, e.g. as regards the notification of decisions, reasoning and reopening.
20.2. If a Fund member does not accept the decision of the board of directors of the Fund in a matter referred to the board, he or she may refer the dispute to an arbitration tribunal within three months of the notification of the decision. The arbitration tribunal shall be composed of three members, one nominated by the Fund member, one by the Pension Fund and third member nominated by the Financial Supervisory Authority. The arbitration tribunal shall rule on the matter on the basis of the claims, evidence, merits and other information that was available to the board of directors when the board adopted a decision on the matter. If new claims, evidence and merits appear in the course of procedure before the arbitration tribunal the matter shall be referred back to the board of directors of the Fund for reopening. The board of directors is then required to reopen the case for a decision. The decision of the arbitration tribunal is final for both parties. The cost of arbitration shall be divided between the parties to the case, with the Fund member, however, never paying more than 1/3 of the cost of arbitration. Proceedings before the arbitration tribunal shall in other respects be subject to the Act on contractual arbitration.
21.1. The Icelandic Financial Supervisory Authority (FME) supervises the Fund’s activities in accordance with Act No. 129/1997 and Act No 87/1998.
22.1. A Fund member may dispose of up to 3.5% of the contribution base in excess of 12% of the contribution base to the Fund’s Specified Personal Savings Department, if provided for in a collective agreement or employment contract. The board of directors of the Fund is at the same time the board of directors of the Specified personal savings department.
22.2. Persons requesting membership of the Specified Personal Savings Department shall notify the Fund in a verifiable manner in accordance with the rules established by the Fund in compliance with the provisions of applicable laws and regulations. Fund members can, in the same manner, give notice that they wish to discontinue their payments to the Specified Personal Savings Department, in which case their contributions shall accrue to the Mutual Insurance Department.
22.3. The Fund shall make changes in the disposals of a contribution in accordance with the notified decision of a Fund member according to the above as promptly as possible and no later than two calendar months from the time that the notification is received in a verifiable manner. A decision on a change in the allocation of a contribution for the future shall not affect a contribution that has previously been allocated.
22.4. Contributions paid into the Specified Personal Savings Department shall be the private asset of the right holder making the payment. A contribution to the Specified Personal Savings Department does not confer an entitlement to a predetermined pension; instead, payments out of the Fund shall be based on the holdings of the member in question.
22.5. A Fund member is permitted to begin withdrawals from the Specified Personal Savings Department from the age of 62, in which case payments shall be distributed at a minimum over the period remaining to him/her until the age of 67. At the request of the right holder deviation is permitted from the above refunding period if the balance is under ISK 500,000. This reference amount shall be adjusted annually based on changes in the consumer price index from the base index of 173.5 points.
22.6. A right holder who for reasons of disability needs to cease work before reaching the age of 62 years is entitled to payment of his/her balance in the Specified Personal Savings Department, paid in equal monthly payments over a period of not less than 7 years. In the event that the percentage of disability is less than 100%, the annual payment shall be reduced in proportion to the reduced percentage of disability and the payment period extended accordingly. At the request of the right holder deviation is permitted from the above refunding period if the balance is under ISK 500,000. This reference amount shall be adjusted annually based on changes in the consumer price index from the base index of 173.5 points.
22.7. On the decease of a Fund member, his or her relatives acquire the right to the balance according to the rules of the Inheritance Act. If a right holder does not leave any children or a spouse the holding shall accrue to the estate of the right holder without the limitations of the second sentence of the second paragraph 8 of Act No. 129/1997.
22.8. The board of directors of the Fund is permitted to offer one or more investment plans in the Specified Personal Savings Department. A separate investment strategy shall be established for each individual investment plan in accordance with Article 36 of Act No. 129/1997. If more than one investment plan is offered, the Fund member shall state his/her selection of plan by a notification to the Fund in a form decided by the Fund. If the Fund offers more than one investment plan, a Fund member may request a transfer between investment plans under the rules established by the board of directors of the Fund.
22.9. The operation of the Specified Personal Savings Department shall be financially segregated from the operation of the Fund and other departments. Joint expenses shall be shared in a reasonable and unequivocal manner between the operating segments of the Fund's departments. The custody and operating of the investment portfolio of the Specified Personal Savings Department in combination with the portfolios of other departments of the Fund is permitted. Each department then holds a proportional claim to the portfolio and participates proportionally in expenses.
22.10. Right holders are not permitted to assign, pledge or dispose in any other manner of balances or entitlements in Specified Personal Savings Department except as specifically permitted according to Act No. 129/1997.
23.1. Wage earners and persons engaged in business operations or self-employed persons are permitted to pay contributions to the Private Pension Department or toward supplementary insurance coverage in accordance with Act No. 129/1997. The board of directors of the Fund is also the board of directors of the Private Pension Department.
23.2. Prospective contributors to the Private Pension Department shall enter into a written contract with the Fund in accordance with the provisions of Act No. 129/1997 and government regulations based on that Act. It is also permitted, on the basis of a collective agreement, without a written contract with the Fund, to accept payments of contributions from an employer to the private savings of wage earners without contributions on their part.
23.3. The board of directors of the Fund may, having received a request thereto from individual right holders, deduct from their paid-in contributions an amount corresponding to premiums for life or health insurance. Disbursements are subject to the provisions of Article 11 of Act no. 129/1997. The Private Pension Department shall be a party to an agreement on the purchase of such insurance and benefits pursuant to such an agreement shall accrue to the Fund and be entered as a balance with the Fund in the Private Pension Department or as an entitlement in the Mutual Insurance Department
23.4. Contributions paid into the Private Pension Department constitute the personal property of the right holder making the payments and shall be specified on his/her separate account.
23.5. The net income of the Private Pension Department shall be divided among Fund members in proportion to their respective holdings and accrue annually to their personal accounts (see, however, Section 23.11.). The assets of the Fund shall be updated daily based on market value, and the share of Fund members in the Private Pension Department shall be based on that calculation base.
23.6. A contribution to the Private Pension Department does not confer an entitlement to points or a predetermined pension; instead, payments out of the Fund shall be based on the holdings of each member.
23.7. Disbursements from private pension savings and interest may begin when the right holder has reached the age of 60 years, but not until two years after the first payment of a contribution toward entitlements to a pension from private pension savings.
23.8. It is permitted to begin disbursement of private pension savings and interest in equal annual payments to right holders who need to cease work for reasons of disability over a period of no less than 7 years, or for the time remaining until the right holder reaches the age of 60 years. In the event that the disability is assessed at less than 100%, the annual payment shall be reduced in proportion to the reduced percentage of disability and the payment period extended accordingly.
23.9. On the decease of a Fund member, his or her relatives acquire the right to the balance according to the rules of the Inheritance Act. If a right holder does not leave any children or a spouse, the holding shall accrue to the estate of the rights holder without the limitations of the second sentence of the second paragraph of Article 8 of Act No. 129/1997.
23.10. If the holding of a right holder falls short of ISK 500,000, the right holder is permitted to receive a lump-sum payment or distribute disbursements over a shorter period than 7 years; however, the monthly payment shall not be less than ISK 10,000. This amount shall be adjusted based on changes in the consumer price index from the base index of 173.5 points.
23.11. The board of directors of the Fund is permitted to establish a separate investment strategy for each individual plan in conformity with the provisions of Article 36 (a) of Act No. 129/1997, from which a right holder may make a selection in his or her contract with the Private Pension Department.
23.12. The operation of the Private Pension Department shall be financially segregated from the operation of the Fund. Joint expenses shall be shared in a reasonable and unequivocal manner between the operating segments of the Fund's departments.
23.13. A contract may be terminated with two months’ notice. A contract lapses if a right holder ceases the employment which forms the basis for his payments into the Fund, unless the member requests to continue payments to the Private Pension Department. Termination of a contract on pension savings or supplementary pension savings does not give rise to the right to disbursement of a balance or entitlements. A right holder may transfer his/her balance or entitlements, following termination [of his/her contract], between custodians pursuant to the third paragraph of Article 8 of Act No. 129/1997, against payment of costs.
23.14. Permission to refund pension savings in the Private Pension Department to foreign nationals is subject to the provisions in the first sentence of Section 16.1.
23.15. Right holders are not permitted to assign, pledge or in other ways to dispose of holdings or entitlements pursuant to a contract on supplementary insurance coverage or private pension entitlements. However, it is permitted to enter into an agreement pursuant to points 1-3 of the third paragraph of Article 14 of Act No. 129/1997 on the sharing of the entitlements between the right holder and his or her spouse.
24.1. Motions on amendments to these Statutes may only be addressed if they have been received by the board of directors before 15 January of each year. The board of directors of the Fund shall, at a minimum four weeks before an annual general meeting, send to the member unions and Confederation of Icelandic Employers motions on amendments to the Statutes for the purpose of information. Also, the motions must be included in the notice of the meeting. Motions intended to bring about an increase in entitlements or a change in investment strategy which may be expected to have an impact on the Fund’s ability to pay pensions shall be accompanied by an actuarial audit of the consequences of the amendment for the solvency of the Fund. A motion on an amendment that could impair the position of the Fund, with the consequence that the Fund no longer fulfils the minimum requirements of Act No. 129/1997, or of the contract between the Icelandic Federation of Labour and the Confederation of Icelandic Employers of 12 December 1995, as subsequently amended, shall be dismissed from the annual general meeting. The motions shall be available for inspection at the offices of the Fund for two weeks before the annual general meeting, and advertised, in order to enable Fund members to submit comments at the annual general meeting.
24.2. Motions to amend provisions that constitute the substance of collective agreements, e.g. on contributions and the constitution of the Fund, including on the role and composition of the council of representatives, can only be addressed at an annual general meeting with the consent of 1/3 of the Icelandic associations of employers and wage earners that are affiliated with the Fund. The weight of the votes of individual member organisations of the Fund is then subject to the provisions of Section 5.3, with the approval needed of both the majority of associations of labour unions and the associations of employers that are affiliated with the Fund.
24.3. Amendments of these Statutes will only take effect if they have been approved by a minimum of 2/3 of the votes of representatives at the Fund's annual general meeting and obtained the confirmation of the Minister.
24.4. The board of directors of the Fund is authorised to amend these Statutes without placing the amendments before an annual general meeting if such amendments are required by mandatory provisions of law or regulations. Amendments made under the authorisation provided for in this section shall be presented formally at the following annual general meeting of the Fund.
These Statutes shall enter into force on the first day of the month after the confirmation of the Ministry of Finance and Economic Affairs has been obtained.
Interim provision I: In 2023-2025 the result of the projection of entitlements pursuant to Section 12.6 shall be multiplied by the coefficient from the following table for those persons who are allocated a disability pension for each separate year:
After 2025 the projection of entitlements will take place in accordance with Section 12.6 and this Article shall be deleted.
Entitlement tables in effect as of 1 January 2023. The entitlement tables replace previous entitlement tables, which apply to that date.
TABLE I Annual pension entitlements in ISK from 67 years of age for each contribution of 10,000 ISK paid by a Fund member in each year of age.
| Entitlement |
|---|
| 761 |
| 751 |
| 741 |
| 733 |
| 723 |
| 714 |
| 687 |
| 661 |
| 636 |
| - |
| - |
| - |
| - |
| - |
| - |
Entitlements in equal accrual are the average of entitlements from 25 to and including 64 years of age, or ISK 1,048 for each contribution of 10,000 ISK.
Criteria: Interest is 3.5%, annual and index-linked. Age and contribution composition in 2021. Gender ratios: 64% Men and 36% Women.
Specific life expectancy based on the experience of 2014-2018 among Fund members and assuming a reduced future mortality rate according to actuarial projections dating from 2021.
Specific probability of disability based on Fund member experience in 2011-2016.
Table II Reduction of old age pension when the taking of a pension begins before the age of 65 years or increase after the age of 67.
Entitlements to be multiplied in accordance with Table I with the applicable coefficient based on age of pension taking.
| Change for each month between years of age |
|---|
| -0.32% |
| -0.35% |
| -0.38% |
| -0.42% |
| -0.46% |
| -0.53% |
| -0.59% |
| - |
| 0.65% |
| 0.73% |
| 0.82% |
| 0.92% |
| 1.04% |
| 1.18% |
| 1.35% |
| 1.55% |
| 1.80% |
| 2.10% |
| 2.46% |
| 2.92% |
| 3.50% |
TABLE III Increase and reduction tables for deferred old-age pension entitlements from the Seamen’s Pension Fund
Proportional adjustment of old age pension when the taking of a pension begins before or after the age of 65 years
| Change for each month between years of age | ||
|---|---|---|
| -0.37% | ||
| -0.40% | ||
| -0.44% | ||
| -0.48% | ||
| -0.53% | ||
| 1 | ||
| 0.62% | ||
| 0.68% | ||
| 0.76% | ||
| 0.84% | ||
| 0.94% | ||
| 1.06% | ||
| 1.20% | ||
| 1.37% | ||
| 1.56% | ||
| 1.79% | ||
| 2.08% | ||
| 2.42% | ||
| 2.85% | ||
| 3.37% | ||
| 4.04% |
Overview of specific changes in earned pension entitlements In the Mutual Insurance Department following the entry into force of the Statutes of Gildi Pension Fund on 1 June 2005, approved at annual general meetings of the Fund in accordance with Sections 7.3 and 7.4 of the Statutes and, as applicable, the second paragraph of Article 39 of Act No. 129/1997 on mandatory pension insurance and the operation of pension funds
a) Accrued liabilities of the Fund in respect of all Fund members who have reached the age of 67 years, in addition to recipients of disability pensions and spouse pensions, were calculated on the one hand in accordance with the new mortality and life expectancy tables and on the other hand in accordance with the earlier mortality and life expectancy tables. The calculations were based on 31/12/2021. Earned entitlements of Fund members according to the new mortality and life expectancy tables were recalculated so that the accrued liabilities of the Mutual Insurance Department in respect of this group would constitute the same proportion of the accrued liabilities of the Mutual Insurance Department as they were according to the earlier mortality and life expectancy tables. The accrued entitlements of this group were reduced by 3.9% as a result.
b) Accrued liabilities in respect of other Fund members than those specified in Item (a) above, apart from recipients of a child pension, were calculated on the one hand in accordance with the new mortality and life expectancy tables and on the other hand in accordance with the earlier mortality and life expectancy tables. The calculations were based on 31/12/2021. Earned entitlements of Fund members in according to the new mortality and life expectancy tables were recalculated so that the accrued liabilities of year group of this group would constitute the same proportion of the accrued liabilities of the Mutual Insurance Department as they were according to the earlier mortality and life expectancy tables.
The annual general meeting agreed on the same occasion that following the above actions the pension entitlements of all Fund members earned in 2021 or earlier should increase by 15%.
It was therefore resolved that earned entitlements should be reduced in accordance with the following table:
| Change | |
|---|---|
| -8.3% | |
| -8.0% | |
| -7.7% | |
| -7.3% | |
| -7.0% | |
| -6.6% | |
| -6.2% | |
| -5.8% | |
| -5.3% | |
| -4.9% | |
| -4.4% | |
| -4.1% | |
| -8.6% |
The changes in earned entitlements in total, taking into account the 15% increase in entitlements decided at the same meeting, were as follows:
| Change | ||
|---|---|---|
| 5.5% | ||
| 5.8% | ||
| 6.1% | ||
| 6.6% | ||
| 6.9% | ||
| 7.4% | ||
| 7.9% | ||
| 8.3% | ||
| 8.9% | ||
| 9.4% | ||
| 9.9% | ||
| 10.3% | ||
| 5.1% |
The earned entitlements of members older than 67 years of age and recipients of disability and spouse pensions are increased by 10.5%. The above proportional changes in earned entitlements of year groups will be implemented no later than 1 September 2022. If the Minister has not confirmed the amendments of the Fund’s Statutes prior to that time the changes will be implemented on the first business of the next month following the confirmation by the Minister.
Disposition of disability contribution 2011:
a) The entitlement accrual of Fund members shall be increased by 4.5% of their contributions. Entitlements pursuant to this provision shall be calculated in full in accordance with rules on age-dependent accrual. These entitlements shall be identified separately in the Fund’s entitlement accounts; they do not confer a right to projection.
b) A supplementary pension shall be paid to pensioners other than recipients of a child pension amounting to 4.5% of their pensions. The supplementary pension shall be paid monthly, like other pensions. This supplementary pension shall be marked separately in the Fund’s entitlement accounts.
Disposition of disability contribution 2018:
a) The entitlement accrual of Fund members shall be increased by 4.0% of their contributions. Entitlements pursuant to this provision shall be calculated in full in accordance with rules on age-dependent accrual. These entitlements shall be identified separately in the Fund’s entitlement accounts; they do not confer a right to projection.
b) A supplementary pension shall be paid to pensioners other than recipients of a child pension amounting to 4.0% of their pensions. The supplementary pension shall be paid monthly, like other pensions. This supplementary pension shall be marked separately in the Fund’s entitlement accounts.
Overview of specific changes in earned pension entitlements following the entry into force of the Statutes of the West Fjords Pension Fund on 1 July 2005, approved at annual general meetings of the Fund in accordance with Sections 7.3 and 7.4 of the Statutes and the second paragraph of Article 39 of Act No. 129/1997 on mandatory pension savings and the operation of pension funds.
Disposition of disability contribution 2011:
a) The entitlement accrual of Fund members shall be increased by 3.4% of their contributions. Entitlements pursuant to this provision shall be calculated in full in accordance with rules on age-dependent accrual. These entitlements shall be identified separately in the Fund’s entitlement accounts; they do not confer a right to projection.
b) A supplementary pension shall be paid to pensioners other than recipients of a child pension amounting to 3.4% of their pensions. The supplementary pension shall be paid monthly, like other pensions. This supplementary pension shall be marked separately in the Fund’s entitlement accounts.
Disposition of disability contribution 2012:
a) The entitlement accrual of Fund members shall be increased by 3.2% of their contributions as of 1 January 2013 and by 3.4% until that time in accordance with the current Statutes. Entitlements pursuant to this provision shall be calculated in full in accordance with rules on age-dependent accrual. These entitlements shall be identified separately in the Fund’s entitlement accounts; they do not confer a right to projection.
b) A supplementary pension shall be paid to pensioners other than recipients of a child pension amounting to 3.2% of their pensions as of 1 January 2013 and by 3.4% until that time in accordance with the current Statutes. The supplementary pension shall be paid monthly, like other pensions. This supplementary pension shall be marked separately in the Fund’s entitlement accounts.
Disposition of disability contribution 2013:
a) The entitlement accrual of Fund members shall be increased by 2.9% of their contributions as of 1 January 2014 and by 3.2% until that time in accordance with the current Statutes. Entitlements pursuant to this provision shall be calculated in full in accordance with rules on age-dependent accrual. These entitlements shall be identified separately in the Fund’s entitlement accounts; they do not confer a right to projection.
b) A supplementary pension shall be paid to pensioners other than recipients of a child pension amounting to 2.9% of their pensions as of 1 January 2014 and by 3.2% until that time in accordance with the current Statutes. The supplementary pension shall be paid monthly, like other pensions. This supplementary pension shall be marked separately in the Fund’s entitlement accounts.