Gildi Pension Fund was established on 1 July 2005 by the merger of Framsýn Pension Fund and Lífeyrissjóður sjómanna. The activities of Gildi Pension Fund are governed by Act No. 129/1997 on the Mandatory Insurance of Pension Rights and the Operation of Pension Funds and by the fund’s Articles of Association.
Premiums to a pension fund for mutual pension protection
Cf. Paragraph 1, Article 2 of Act No. 129/1997, the premium for the acquisition of pension rights shall be determined with a special law, a collective wage agreement, an employment contract or by other similar means. The minimum contribution to the pension fund must be at least 12% of the premium base. Paragraph 2, Article 2 of the Act states that membership in a pension fund, payment of a pension premium and the division of the premium between the employee and the employer depends on the collective wage agreement that determines the minimum wage in the relevant profession, or special laws if applicable. If the collective wage agreement does not cover the relevant field of work or if employment-based working conditions are not based on a collective wage agreement, the person concerned chooses a pension fund as permitted by the rules of the individual funds. Membership in a pension fund must be specified in a written employment contract.
All employers who carry out activities in the profession for which the unions above have entered into a collective wage agreement on are obliged, with reference to Paragraph 2, Article 2 of Act No. 129/1997, to pay pension premiums to the mutual pension division of Gildi Pension Fund for its employees, in the proportions specified in the relevant collective wage agreement.
Membership in Gildi Pension Fund, therefore, is mandatory, and making payments into mutual pension divisions of other pension funds is not permitted.
The collective wage agreements of the unions that are members of Gildi Pension Fund provide for the employee’s authorisation to start saving private pension provided the employer pays a certain matching contribution. Gildi Pension Fund operates a special private pension division according to the provisions of Act No. 129/1997 which accepts such premiums for supplementary insurance protection. From the provisions of this Act, it follows that an employee is free, unlike what applies to the mutual pension division, to dispose of private pensions to any entity who has authorisation to carry out such activities. In addition to pension funds, e.g. commercial banks have been granted such permission.