Payouts from the age of 60
Private pension is available for payment from the age of 60, as long as at least two years have passed since the first deposit. You can then handle payouts as you see fit. You can get a certain amount paid monthly, get single payments as per your convenience, or even get the entire amount paid in one lump sum.
Income tax is deducted from the payouts. It might therefore be wise to keep the tax brackets in mind and distribute payments so that there is less chance that they will fall into a higher tax bracket.
The following rules apply to withdrawals:
- Applications must be submitted through My Pages.
- Private pension payments are processed on two fixed dates each month: the 1st and 15th of the month.
- Withdrawal applications must be submitted at least five working days before the requested payment date.
- Regular monthly payments are processed on the 1st of each month.
- The amount paid will be based on the value of the asset portfolio as calculated on the payment date.
- Only one withdrawal per month from the private pension is allowed.
The same rules apply to the transfer of balances between investment options or to other custodians, except that if the 1st or 15th of the month falls on a holiday, the transfer will take place on the next working day.
When is the private pension paid?
- From the time fund members reach 60 years of age
- In case of disability of fund members
- To the heirs upon the death of a fund member
Payment due to death
Private pension savings are inheritable and become available for payment upon the death of the fund member. Distribution between spouse and children is according to the Marriage and Inheritance Act, which stipulates that a married spouse receives two-thirds (2/3) and the children receive one-third (1/3). The distribution of private pension savings takes place even if the spouse retains an undivided estate. If there are no legal heirs, the private pension savings become part of the deceased’s estate.
Upon payout, income tax is deducted from private pension savings, but not inheritance tax.
Upon the death of a fund member, the heirs must apply for the division of private pension. After that, they have the option of keeping the balance and continuing to use it or apply for a payout.
Payout due to disability
If a fund member is declared disabled before the age of 60, it is possible to have private pension savings paid out. The balance is then spread evenly over 7 years based on 100% disability. If disability is assessed as less than 100%, the annual payment is reduced in the same proportion and the payment period is extended accordingly.
A fund member that has acquired the right to a payout due to disability can request a payout in a lump sum if the balance is below a certain indexed threshold amount.
Reference amount for lump sum payment of private pension due to disability:
ISK 1,872,334
in June 2025