Reimbursements to foreign nationals temporarily working in Iceland

Please note that rules of reimbursement may vary between pension funds.

Who is obligated to contribute to a pension fund in Iceland?

In accordance with Section 1.4 of Act No. 129/1997 on mandatory pension insurance and the operation of pension funds all persons employed in Iceland are obligated to contribute to a pension fund from the age of 16 to 70.

Exempt from this obligation are citizens of the European Economic Area (EEA) employed by an overseas company and working in Iceland for a period of no more than 12 months. Such persons are not obligated to pay premiums to an Icelandic pension fund provided that they have an A-1 form from their home country. The A-1 form is certification that the employee is insured in accordance with the social security legislation of their home country.

Can pension premiums paid by foreign nationals temporarily working in Iceland be reimbursed?

According to Section 19.4 of Act No 129/1997, on mandatory pension insurance and the operation of pension funds, pension contributions of foreign nationals emigrating from Iceland may be reimbursed, provided this is not prohibited in accordance with international agreements to which Iceland is a party. No reimbursements are authorized to nationals of USA, Switzerland and countries in the European Economic Area (EEA). EEA countries are as of 01 March 2020:

Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and United Kingdom.

In cases where a foreign national has the right to reimbursement* an application must be sent to the fund accompanied by the following:

  1. Confirmation from the last employer regarding termination of employment.
  2. Copy of a passenger ticket back to the home country or equivalent confirmation.
  3. Copy of the applicant's passport.
  4. The applicant's bank account number in Iceland.

Please note that reimbursement of contributions will cancel all benefits earned  for the period in question from the General Pension Fund. An income tax will be deducted from the reimbursement.

If any questions arise regarding the obligations and rights of foreign nationals, please contact the General Pension Fund consultants.

*Reimbursement can be limited to a specific portion of the contributions on proper actuarial premises, i.e. pension fund may retain the part of the paid premium that is equivalent to the fee for the entitlements that the said individual has enjoyed in the fund while he contributed to it (invalidity, spouse or child pension).

Application form