Lífeyrisáætlanir

Lífeyrisáætlanir, or pension plans, are financial arrangements designed to provide individuals with income during their retirement years. In Iceland, these plans are a crucial part of the social security system and private savings initiatives. The Icelandic pension system is broadly divided into two main pillars: the public pension and supplementary private pension schemes.

The public pension, managed by Tryggingastofnun ríkisins (TR), provides a basic safety net for all residents, based on age, residency, and income. This pillar is funded through contributions from individuals and employers, as well as general tax revenue.

Beyond the public system, individuals can opt for supplementary private pension plans. These are often offered through employers or can be established independently. They allow individuals to save additional funds for retirement, offering more flexibility and potentially higher returns. These private plans can take various forms, including defined contribution plans where the final pension amount depends on contributions and investment performance, or defined benefit plans that promise a specific income level in retirement.

The aim of these diverse lífeyrisáætlanir is to ensure that individuals have sufficient financial resources to maintain their standard of living after they stop working. Retirement planning is encouraged from an early age, and various financial institutions and advisors offer guidance on choosing and managing these plans. The system is subject to ongoing review and adjustment to ensure its long-term sustainability and adequacy for the Icelandic population.