Division V

Membership requirements

Division V is open to everyone and provides comparable rights to pension funds in the general pension fund system. If you would like to be a member of Division V you must notify your employer and if you would like to divide premiums you can submit the application below.

If you are already a member of Division A you can choose to move to Division V at any time. However, you cannot change back to Division A. If you wish to move to Division V please submit the application below.

Apply for Division V and to divide premiums  

How do I move from Division A to Division V?

Divide premiums

You can choose to allocate premiums over 12% into a personal pension savings. Out of 15.5% premium you can allocate 3.5% into a personal pension savings. You are required to make an agreement with a personal pension fund, as Brú does not currently oversee any personal savings.

Application to divide premiums

 

 

Entitlements

Premiums payments go towards Mutual Insurance (Samtrygging) of Brú Pension Fund. This means you are entitled to lifelong pension payments from the time you start paying premiums to Brú, different from personal pension savings where you collect a ballance on an account. You accumulate rights to Lifelong pension, spouse pension, child pension and disability pension.

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See your accumulated rights in Lífeyrisgátt

More information about retirement

Lifelong pension

• Entitlements depend on premiums, age and returns.
• Full pension rights apply if you begin receiving pension at 67
• You can begin receiving pension from age 60 to 80.
• 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 calculations are based on full pension rights at age 67)

Note: If you paid premiums to Division V before changes on 1st June 2017  there are different applications to the rights you acquired at that time period. Instead of full pension measured at age 67, the full pension rights, before changes, are measured at 65 years. This means:

• Full pension rights (acquired before changes) apply if you start receiving pension 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)

Spouse pension

If a fund member dies, the spouse is entitled to spousal pension for two years, granted that the fund member was an active member before passing or has acquired certain rights.

• Full entitlement is 50% of the fund member‘s projected rights (based on the rights had the fund member continued premiums up to the age of 65 years)
• Full entitlement applies for the first 24 months.
• If the spouse has children younger than 18 years of age, the full spouse entitlement is maintained until the youngest child reaches the age of 18.
• If the spouse is more than 50% disabled and younger than 67 when the member dies, their full entitlement will be maintained if the disability applies.

Disability pension

If you have paid into the Fund for at least 24 months before disability and been assessed by a doctor to be more than 50% disabled and have incurred 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 rights you would have accumulated, if you had paid premiums up to that age)
• Disability pension is based on the assessed level of disability (for example, 50% disability means 50% entitlement)
• Disability pension is based on the inability to perform the work you employed at the time of assessment, for a period of three years.
• After that period, your disability is reassessed 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, their children are entitled to pension until the age of 18.
• This is a specific amount, indexed to CPI.
• Child pension at the result of the death of fund member is ISK 23,564 (based on the average CPI of the year 2022)

 

Personal Pension Savings

When you pay pension premiums, you have the option to submit a portion of each payment to a personal pension savings account (with a separate personal pension fund). Personal savings can be both general private pension and a voluntary additional personal pension. These savings are private property, typically released at retirement age and go to your spouse and children if you pass, but additional personal pension can also be used for the purchase of property or payments on a mortgage loan. Additional pension savings greatly increase your assets until you are sixty – by up to 9.5%.

Dividing premiums

When premium payments exceed 12% you can allocate the extra premiums to personal pension savings. For example, out of 15,5% premium you can allocate 3,5% to a personal pension savings account. Brú Pension Fund does not currently oversee personal savings accounts but offers fund members of Division V to divide their premiums, provided that an agreement with a personal savings provider has been made.

Divide premiums in Division V

Additional Pension savings

You can also choose to pay an additional premium of 2-4%, with an additional 2% from your employer, into a private saving scheme. You apply for additional pension savings directly through a personal pension fund.

About additional personal pension on Lífeyrismál.is

 

 

Accumulating rights

Entitlements are subject to premiums, age, and return.

Division V is age-linked and actuarially set up to consider the return time of contributions, such that the member benefits from the time the premium is invested. The younger you become a member, the higher your entitlement will be.

Good returns on assets translate into higher pension rights.

The agreed-upon conditions for Division V may be changed upon the recommendation of a Brú actuary because of greater impact of rising life expectancy and increased disability on the performance of the fund. The aim of Brú‘s Division V is for future premiums to cover the cost of accrued pension rights. The Fund must cut pension rights if assets are insufficient to cover commitments, but members will benefit if return on assets is good.