Iceland's pension system is built on a strong foundation consisting of three pillars: the public social security system, employment-related pension funds with compulsory membership, and voluntary pension savings. The primary focus of the Icelandic system is on fund accumulation, meaning that assets are deposited as soon as rights to pensions are acquired for future payouts.
With the enactment of specified private pensions in 2023, the coinsurance component of the pension system has weakened, leading to increased inconsistencies and risks for fund members. This change may negatively impact the pension rights of individuals with lower incomes, women, and those who become disabled early in their working lives. The 2016 agreement aimed to equalize pension rights between the public and private sectors, fostering harmonization and sustainability within the system. However, the introduction of specified private pensions undermines these objectives. BSRB opposes changes to the pension funds that add complexity and risk for members.
BSRB emphasizes the importance of protecting mutual insurance funds and insists that any changes to the pension fund system should strengthen them. There must be greater equalization among funds to address different disability burdens through increased financial contributions from the state. Additionally, the incentives for private pension savings within compulsory contributions should be reduced. Currently, these incentives allow withdrawals between the ages of 60 and 62. This creates inequality between those whose pensions are entirely in mutual insurance and those able to withdraw part of their compulsory pension as private funds before retirement. Those who do so will receive lower payments from their pension fund later on, despite potentially increasing their income through higher payments from the social security system. BSRB is against individualism in pension matters and urges the government to abandon this approach.
Furthermore, BSRB demands that professions where individuals may need to stop working early—due to stress or other exhausting conditions—be granted the right to access early pensions. This should be financed with a higher employer contribution to the pension fund. It is also crucial to ensure that individuals who wish to continue working after reaching the age of 70 can do so without jeopardizing their pension rights.
Social security plays a vital role in the welfare society's safety net, ensuring a decent standard of living for those who have been unable to accumulate sufficient pension savings during their working lives or who have lost the ability to work due to illness, accidents, or disabilities.
BSRB demands that employees who have contributed to pension funds throughout their careers be recognized for their contributions when they retire. Social security payments must align with wage developments in the country. Additionally, the general income threshold must be raised, as it has remained unchanged since 2017. This stagnation has resulted in a growing portion of payments from pension funds, which in turn has reduced social security payments, as the tax-free income limit has not kept pace with price level increases.
Furthermore, BSRB supports the main objectives of the new invalidity pension system. These goals include enhancing the income of invalidity pensioners, simplifying the invalidity pension system, and facilitating the participation and reintegration of individuals into the labor market after experiencing trauma. It is crucial to enable people to return to work after facing illness or accidents.