Pension rights

Working in Europe | Pension rights | Faroe Islands

When retiring from employment or being unable to work due to disability, pension is available from several sources under certain circumstances.

There are various types of retirement pensions in the Faroe Islands. 

 

 

 

All individuals up to the Faroese state pension age of 67 with full tax liability in the Faroes are required by law to save a portion of their salary in a pension scheme. The portion is increased by 1 per cent each year until 2029 when all individuals will be saving at least 15 per cent of their salary in a pension scheme.

Every type of payment of wages is subject to an obligatory pension contribution. This also includes committee payments, secondary jobs, overtime work, holiday allowance and more.

For most employees pensions are a built-in feature of employment contracts. The pension contribution is set according to agreements between trade unions and employers. An individual pension plan is normally set up by the trade unions. Most trade unions have an agreement with the Faroese Life Assurance Company about retirement pension.

Academic employees receive 16% of their salary in pension contribution. Their pension plan also has a built-in insurance scheme which covers serious illness, disability and death.

Pension savings are pre-taxed at 40%.

Individuals moving to the Faroe Islands to work for a limited period can achieve a pension exemption. This means that an amount equivalent to the pension contribution will be paid out together with the monthly salary. Exemptions may be granted for up to 60 months.

The work related retirement pension is inaccessible until retirement age which is 67 years. Up to 15 percent can be paid out in one payment when the owner reaches the age of 67. At least 45 percent of the pension must be paid out as a lifelong continuous pension on a monthly basis.

 

Read more:

Faroese Life Assurance Company (in Faroese)

 

 

 

 

Read more:

Department of Social Services (in Faroese)