Pension Fund
Almenni is an open pension fund. As such, it both serves as an occupational pension fund for Architects, Doctors, Musicians, Technicians and Tourist Guides.
- Almenni is also a pension fund for individuals who have the option of selecting their own pension fund and/or are willing to pay a supplementary premium to increase their spending power when they retire.
- Fund members can pay both mandatory premiums (required by law) and supplementary premiums (voluntary) to the fund. Minimum mandatory premium (15,5% of total salaries) are divided between a mutual insurance fund (8,5% of total salaries) and private accounts (7% of total salaries). Supplementary premiums exceeding the minimum premium go into private accounts.
- Fund members can choose between six pre‐designed portfolios for their supplementary premiums. Members can select portfolio according to their age or the risk they are willing to take. Furthermore, members can select the “Lifetime Track” in which the holdings are transferred between the “Life Portfolios” in accordance with each member´s age.
Contributions
According to Icelandic law, it is mandatory for employees and self-employed, between 16 to 70 years of age to pay minimum 15,5% of their total salaries into a certified pension fund.
- In general, the employee pays 4% and the employer 11,5%. In addition, individuals can pay up to 4% of their total salaries to supplementary pension schemes.
- At Almenni, 8,5% of total salaries is invested in a mutual insurance scheme and 7% of total salaries is invested in private accounts. This makes Almenni unlike most other pension funds in Iceland, as they in general deposit all of the mandatory contributions to the mutual insurance scheme.
- A majority of the mandatory pension premium is invested in a mutual insurance fund (8,5% of total salaries). The main purpose of the Mutual Insurance Fund is to pay old age, disability, spouse, and child pension.
- In Iceland employees and self-employed can pay up to 4% of their total salaries voluntarily contribution to supplementary pension schemes. Most employees who save 2%-4% of their wages will get a 2% reciprocal from his or her employer.
- Supplementary contributions over 12% are paid into the member’s personal private accounts.
- Fund members can start withdrawing from their private accounts at the age of 60, making retirement more flexible for members.
Mutual Insurance Fund
The main purpose of the mutual insurance fund is to pay lifelong and disability pension, spouse and children pension of the disabled or deceased.
- Old Age Pension. Lifelong old age pension. Pension payments can begin at age 60 to 72.
- Disability Pension. Disability pension is paid if the loss of capacity is reduced by 50% or more. The amount of the disability pension is evaluated according to earned pension entitlements. If a fund member has paid premiums during three out of the past four years and for six months during the past 12 months prior to the invalidity, an additional calculation is made to ascertain the entitlements the fund member would have earned through payments until age 65. Invalidity pension is paid until age 70, followed by old age pension.
- Spouses Pension. Surviving spouse pension is paid on the decease of a spouse. The surviving spouse pension is equal to half the amount of the invalidity pension. The pension is paid for two years and then half the amount for one additional year or while the youngest child is younger than 20 or if the spouse suffers from a 50% invalidity and is younger than 67.
- Child Pension. Child pension being paid on the loss of capacity or the death of a fund member, to the fund member’s child until it reaches 20 years of age.
Private accounts
A part of minimum contribution (7% of salaries) and supplementary contributions (contributions above 15,5%) are paid into a private account in the fund member’s name. If a member receives 15,5% in minimal contribution, the 7% of his/her salaries is paid into a private account.
- Fund members can choose between six portfolios for their private accounts.
- Members can start withdrawing from their private accounts at the age of 60, making pension payments more flexible by allowing them to decide how they withdraw their balances.
- Members can withdraw from their private accounts if they will be disabled. In that case, a balance must be withdrawn over a period of seven years.
- The private accounts are inheritable.
- Members can use their private accounts to pay down their mortgage.