Guide to Global Payroll Management - 2020 - B-24

Guide to Global Payroll Management
The request must include the same information as is required for a certificate of coverage from the U.S. (see page 7-3), except that the employee's Icelandic Individual Taxpayer
Registration (CPF) or your Icelandic Worker's Identification Number (NIT) rather than the
U.S. number must be provided. The U.S. employer should retain a copy of the Icelandic certificate of coverage.

Rules on combining work credits
The agreement makes it easier to qualify for benefits by allowing the combination of
social security credits from both countries. Under U.S. Social Security, an employee may
earn up to four credits each year depending on the amount of covered earnings. The
Icelandic social security system measures period of coverage in months, so three months of
Icelandic coverage is equal to one U.S. credit.

Summary of social security benefits
Iceland has two old-age, disability, and survivor benefits schemes - a universal scheme
that is income tested, and a mandatory occupational pension. The universal scheme does
not get funds from the insured person. In the mandatory occupation scheme, the insured
person contributes at least 4% of gross income, but collective agreements may call for additional contributions.
Retirement/old age - universal pension. Under the universal scheme, a worker may
retire at age 67 (age 60 for some categories of seamen) with at least 40 years of residence
from age 16 to age 67. A worker's employment may continue. The pension is subject to
recovery if the worker's taxable income exceeds the income thresholds for employment
income or nonemployment income.
A partial universal pension is available to a worker with at least three but less than 40
years of residence from age 16 to age 67.
Also, a worker may take an early pension at age 65 if total monthly pension income
(including from universal and mandatory occupational pensions) meets a minimum threshold.
A worker may also defer receiving the universal pension up to age 72 (or age 80 if born
since 1952).
There is also a means-tested supplement for single households and a means-tested
supplement pension supplement.
A child's supplement is paid for each dependent child younger than age 18.
Retirement/old age - mandatory occupational pension. Under the mandatory occupational pension, a worker may retire at age 67 with at least 40 years of contributions
(private-sector employees) or age 65 with at least 32 years of contributions (public-sector
employees).
A partial pension is paid at normal retirement age if the insured does not meet the contribution requirements for a full pension. An early pension at age 65 may be taken by privatesector employees.
The mandatory pension may be deferred up to age 80 (public-sector and private-sector
employees); up to age 72 if the worker was born before 1952.
A child's supplement is paid for each dependent child younger than age 18.

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Guide to Global Payroll Management - 2020

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