Membership requirements
Employees belonging to labour unions BHM, BSRB and KÍ, who are working for a municipality (starting after 1st July 1998) are contractually members of Division A of Brú Pension Fund. Additionally, fund members who decided to change to Division A at the joining of the older municipal funds also have a membership in Division A.
When you pay premiums to Brú Pension Fund, you accumulate rights for lifelong retirement pension. Additionally, you earn the right to a disability pension if your capacity to work is reduced, a spouse pension in the event of your death, and for your children to receive child pension if your capacity to work is reduced or in the event of your death. Premiums, rights, entitlements, and investments vary depending on each division. Here you can see information for Division A.
Employer provides 11.5% and you provide 4%, making a total of 15.5%.
Premium payments are payments you make to Brú Pension fund out of your monthly wages. Payments can vary, but they now stand at 15.5%.
Entitlements
Premiums payments go towards Mutual Insurance (Samtrygging) of Brú Pension Fund. This means you are entitled to lifelong pension, which is different from personal pension savings where you collect a balance on an account. With Mutual insurance, you accumulate rights to lifelong pension, spouse pension, child pension and disability pension.
See your accumulated rights in the Pension Gateway (Lífeyrisgátt)
More information about retirement
Lifelong pension
Premiums aquired before 1st of June 2017
- You can begin receiving pension at age 60 to 80.
- Full pension rights apply if you begin at 65.
- If you choose to begin receiving pension earlier, the estimated pension amount goes down 0.45 – 0.65% for each month you choose to bring forward.
- If you choose to begin receiving pension later, the estimated pension amount goes up 0.56 – 3.55% for each month you move back.
- (These calculations are based on full pension rights at age 65)
Premiums aquired after 1st of June, 2017
- You can begin receiving pension at age 60 to 80.
- Full pension rights apply if you begin at 67.
- If you choose to begin receiving pension earlier, the estimated pension amount goes down 0.35 – 0.60% for each month you choose to bring forward.
- If you choose to begin receiving pension later, the estimated pension amount goes up 0.60 – 3.10% for each month you move back.
- (These calculation are based on full pension rights at age 67)
Spouse pension
If a fund member dies, the spouse is entitled to spouse's pension for five years, granted that the fund member was an active member before passing or was receiving pension payments from the fund.
- Full entitlement is 50% of the fund member‘s projected rights (based on the rights had the fund member continued premiums up until 65 years)
- Full entitlement applies for the first 36 months
- Half entitlement applies for the next 24 months
- If the spouse has children younger than 22 years of age in their charge, the full spouse entitlement is maintained until the youngest child reaches the age of 22.
- If the spouse is more than 50% diabled and younger than 67 when the member dies, their full entitlemet will be maintained as long as the disability applies.
Disability pension
If you have paid into the Fund for at least two years and been assessed by a doctor to be more than 40% disabled and have incured actual loss of income, you could be entitled to disability pension.
- Disability pension is projected to 65 years of age given certain conditions are met (based on the pension rights you would have accumulated, if you had paid premiums up the that age)
- Disability pension is based on the assessed level of disability (for example, 45% disability means 45% entitlement)
- Disability pension is based on the inability to perform the work you employed at the time of assessment, for a period of five years.
- After that period, your disability is reassessed based on the criteria of the ability to perform general work.
- You can apply for disability pension here. You will need a comprehensive doctor‘s certificate (Doctor‘s certificate for application for disability compensation) that must be made within the last three months.
Child pension
- If a fund member dies or is disabled, their children are entitled to pension payments until the age of 22.
- This is a specific amount, indexed to CPI.
- Child pension at the result of a death of fund member is ISK 31,419, based on average CPI of the year 2022.
- Child pension at the result of disability of fund member is ISK 23,564, based on average CPI of the year 2022.
Accumulating rights
On 1st of June 2017 the accumulation of rights for Division A changed from 1,9% equal accumulation (where accumulation of rights is equal throughout you career and unrelated to age) to age-related accumulation of rights (where fund members enjoy profits depending on how long their premiums get returns).
These changes have different effects on fund members, depending on:
- if you were a member before the changes
- If you became a member after the changes
- If you reached the age of sixty before the changes
- If you have stored rights, that is, you changed jobs and started paying into another pension fund but have stored rights in Division A from a previous job.
You paid premiums to Brú Pension Fund before 1st of June, 2017
Members who paid premiums to Brú pension fund, and continue to do so, will be processed through age-related accumulation of rights, but the difference to rights after equal or age-related accumulation are met with specific contribution from employers.
When premiums are paid, equal accumulation (1.9% of yearly earnings, unrelated to the fund‘s returns and time period of rights) and age-related accumulation are calculated. The fund member will receive whatever rights that are more profitable.
From this time, your rights will be guaranteed u and can fluctuate depending on the fund‘s profit standing. This applies to both rights earned before 1st June 2017, and future rights of fund member.
The reference age for retirement is 65 for fund members who continue paying with equal accumulation of rights. However, you can choose to start receiving pension payments from age 60 to 80.
You began receiving pension, or reached the age of 60, before 1st of June 2017
The rights of fund members in Division A who reached age 60 or had started receiving pension before changes, will continue to be pre-set and guaranteed. Therefore, the rights will not be reduced or improved, even if other members experience reduced or improved rights.
You became a pension member after 1st of June, 2017
Members who started paying premiums after 1st June 2017 accumulated rights that are age related and depend on the duration on the rate of return. The younger a member starts premium payments the more value his rights will accumulate due to longer return period.
Stored rights
Members who stopped paying premiums do Division A and joined a different pension fund have stored rights. No changes were made to stored rights on the 1st of June 2017, but from now they can fluctuate depending on indexed-related profit standing of Brú pension fund.
The reference age for retirement is 65. However, you can choose to start receiving pension payments from age 60 to 80.