Pension

According to the agreement, the employer must pay into the member's personal pension. Contributions are made to a pension, which is paid in and out in accordance with the law. This means, among other things, that the member will receive a monthly pension payment, as well as a lump sum payment.

The pension is paid out tax and duty-free according to the law, as the contribution is taxed when paid in. The pension age is set at 67 years.

Members can view an overview of their pension by accessing the customer portal at LÍV – on www.liv.fo. This shows the entitlements, what has been paid in, how the pension is progressing, and what pension the member can expect.

If a member dies before reaching pension age, the equivalent of the accrued value will be paid out. The benefit is paid to the surviving dependents. The payout is designated for the next of kin, unless a different written agreement has been made. The next of kin is the spouse. If there is no spouse, the benefit is paid to the children (heirs). If there are no children, the benefit is paid according to inheritance law.

A cohabiting partner can be insured following a special agreement with LÍV, by filling out a form to change the beneficiary. The staff at LÍV will be happy to provide more detailed guidance on these matters.

Exemption from contributions will be granted if the member’s work capacity is reduced by 2/3 or more. In this case, contributions to the pension will stop after 3 months. Instead, the contribution will be paid by LÍV for as long as the incapacity lasts, if necessary, up until pension age. If a member becomes entitled to benefits, such as becoming incapacitated, this must be reported to LÍV. Application forms can be found on the website www.liv.fo.

If a member leaves their job, the pension insurance will be placed on hold for up to one year, meaning that the member retains unchanged rights to the pension insurance. The fee for the hold period will be deducted from the pension savings.

If the member has taken out other insurance, they may apply to have the pension insurance put on hold, meaning that the pension only provides benefits in relation to the accrued value. It is possible to arrange for the member or a new employer to continue contributing to the pension insurance.

For old contributions, i.e., before 1st of January 2012, the pension will be taxed as regular income, while a lump sum payment is subject to 35% in duties. For the old pension, there is also a benefit for surviving dependents if the member dies, as well as a benefit for surviving children until the child turns 18. These benefits can be viewed on the customer portal.