Pension account withdrawals

You can withdraw your pension at the age of 60. Your personal circumstances are the most important factor when considering the best time to withdraw your money.

When should I withdraw my pension?


Your personal circumstances are the most important factor when considering the best time to withdraw your money.

You should assess your total potential income from other pension funds and the Social Insurance Administration (TR) before you make any decisions.

Íslandsbanki can support you by offering you advice. Please feel free to contact our Investment and Pension advisors by telephone: 440-4900 or by email: sereign@islandsbanki.is

Some points for consideration

  • Many individuals withdraw their pension when they reach retirement age and use the funds to compensate for lost income
  • The tax bracket on your savings can vary, depending on the withdrawal period
  • You can delay withdrawing your pension and continue making returns on your pension plan
  • Returns on your private pension do not affect any income from TR and are tax free

Do I have to withdraw my entire pension at the same time?


You make all the decisions on how and when you would like to withdraw your pension after the age of 60. You can withdraw the total amount or divide it it into monthly payments into your account.

You can make changes to your withdrawal method by contacting Íslandsbanki Investment and Pension services via email: sereign@islandsbanki.is or by telephoning one of our advisors. These changes can take time to process and we will need to know in advance.

Please note that the tax owed can be extensive if you withdraw the entire amount at once.

How does taxation work?


Income tax is paid when you withdraw your pension. Tax brackets vary, and many people decide to withdraw their pension over a longer period (more than one year) as a result.

The difference between tax bracket 1 and 2 is currently 9.3%. The highest tax bracket is enforced when your total income (wages, pension, social insurance and private pension) reach a total of ISK 893,713 per month.

All up to date information on taxation is provided by the Directorate of Internal Revenue: https://www.rsk.is/english/individuals/

Property Tax


Will the withdrawal of my pension affect my property tax discount?

Pensioners often have the right to a discount on their property and sewage tax but this can be affected by an increase in income.

The withdrawal of your pension can in some cases affect these rights.

Will the withdrawal of my pension affect payments from the Social Insurance Administration (TR)?


The withdrawal of your pension does not affect these payments. However, withdrawing your pension and investing it elsewhere could affect these payments.

More information can be accessed here: skatta og skerðingar