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Contributions and pension

Give your pension a clear place in your routine.

Updated
Sources reviewed
Tax year
2026

Mandatory pension insurance in Iceland is 15.5% of salary: a 4% employee contribution and an 11.5% employer contribution. The self-employed pay both on calculated remuneration to a pension fund they choose at registration, monthly according to the fund's rules. Additional pension savings of 2–4% with a 2% match are optional and reduce the taxable base. Contributions earn a retirement pension from age 67 and a disability pension.

Key figures

Employee contribution
4%
Employer contribution
11.5%
Mandatory total
15.5%
on calculated remuneration
Additional savings
2–4% + 2%
optional
Mandatory ages
16–70

When you work independently, pension contributions need to be part of the plan. Start by confirming the appropriate fund and the information it needs from you.

Understand the contribution basis

Lífeyrismál.is, the Icelandic Pension Funds Association’s information site, states that self-employed people generally contribute at least 15.5% of calculated remuneration to a pension fund. Ask the fund about the contributions and reporting that apply to you. Lífeyrismál.is: self-employed contributors.

This is separate from deciding how much you can withdraw from your bank account. The calculated-remuneration guide explains the concept before you review the calculation.

Keep the information together

  1. Record the fund’s name and contact details.
  2. Confirm membership and how contribution information should be submitted.
  3. Check the payment periods and deadlines with the fund.
  4. Keep calculations and payment confirmations with the relevant period.
  5. Review the fund’s statements and ask about discrepancies.

If you change funds or your circumstances change, update the people helping with your business administration. Resolving an unclear item promptly is easier than allowing it to repeat across several months.

Who handles what with Fustle?

With Invoicing and Invoicing + Expenses, you handle filings and payments. Payroll provides calculations and agreed filings for sole traders; you pay the pension contributions yourself on an ordinary subscription. Fixed and flexible pricing include the same service.

Quick answers

Is a calculated contribution the same as a paid contribution? No. Check the payment and its appearance in the fund’s records.

Where can I find information about the funds? Start with the pension-fund directory and confirm membership conditions directly with the fund.

Compare Payroll and the other plans

Sources checked 23 September 2026. General education; confirm membership and individual rights with the relevant fund.

Frequently asked questions

Which pension fund should I choose?

If your profession's collective agreement does not tie you to a specific fund you can choose a general fund. Lífeyrismál.is lists the funds with their benefit rules. Record the choice in RSK 5.02.

What if I do not pay the contributions?

The fund collects unpaid contributions with penalty interest and your rights do not accrue. Skatturinn receives calculated-remuneration data and can compare it with contributions paid.

Do additional pension savings lower my tax?

Your contribution to additional savings, up to 4% of salary, is deducted from the taxable base and lowers withholding now. Tax is paid when the savings are withdrawn.

Sources

General information, not advice on your situation. Skatturinn and other authorities assess each case. Check the review date and sources before relying on a figure.

Where does Fustle fit in?

Record the work and create the invoice. The service you choose determines the support included.

Explore Payroll →Try the payroll calculator →