Persons between the ages of 18 and 67 years can apply to the Social Insurance Administration (Tryggingastofnun) for disability assessment where capability is assessed after illness, accident, or disability. It is a condition that rehabilitation has been exhausted or that a doctor confirms that rehabilitation does not apply.

Individuals’ entitlement is based on their residence in Iceland from 16-67 years of age. The person must have lived in Iceland for at least the three years preceding application. The same applies to residence in another Nordic country under the Nordic countries’ agreement on social insurance. The person must have been resident in Iceland for at least one year after age 16. Full payment is based on 40 years of residence in Iceland.

Disability Pension

Disability pension is intended for individuals aged 18-67 who are unable to work full time due to reduced working capacity. An application is made for a disability assessment where capability is assessed.

  • Most individuals are called in for an examination by a doctor who works independently of TR
  • Disability assessment standard is followed
  • The results are sent to TR's Chief Physician, who makes an assessment to whether there is an entitlement to benefits
  • Those who receive a disability pension are assessed with 75% disability

Disability assessment is usually temporary, but the length of time depends on the situation at hand. It is also possible to apply for retroactive payments for up to two years if it is demonstrated that an illness, accident or disability was present during that period.

Documents supporting the application

When applying for disability, an application must be submitted, but in addition, the following documents must be submitted:

  • Medical certificate for application for disability assessment
  • Self-assessment questionnaire on loss of ability (completed by applicant)
  • A report from the rehabilitation party confirming that rehabilitation has been exhausted (if applicable)
  • Income Estimate
  • Confirmation that the person has applied for payments from a pension fund or that there is no right to payments
  • Information on the use of tax card (can be registered on My pages)

Income Estimate

Income estimate is a prerequisite for payments from TR. In order for pensioners to receive the correct payments, it is important to submit an income estimate. All taxable income is recorded in the income estimate:

  • Employment income, pension fund, income from unions, and capital income such as interest on deposits, rental income, etc.
  • Payments from private pension funds do not affect disability pension but can affect related payments
  • Municipal social assistance payments do not affect disability pension
  • All amounts must be total income before tax (gross)
  • Estimated income is entered from the time applied for and until the end of the year
  • It is possible to request a monthly breakdown of employment income

Frequently Asked Questions

If you live in Iceland: 

You must apply to the Social Insurance Administration (Tryggingastofnun) for Icelandic disability pension. 

If you live in another EEA country, Nordic country or Switzerland, and were previously insured in Iceland: 

Persons who live abroad and are applying for Icelandic disability pension must contact the social security authority in their country of residence.

Because social insurance systems differ in nature between countries, disability assessment can vary and benefits may not be available between countries. Payments from foreign pension funds have the same effect in reducing pension payments as do payments from Icelandic pension funds.

Can you transfer an Icelandic disability pension to another Nordic country?

When persons move to another Nordic country, as a general rule the person receiving a disability pension retains basic payments from Iceland, i.e. disability pension, age-related disability supplement and income insurance, as well as child’s pension, if applicable. Payments requiring legal domicile in Iceland, such as household allowance and minimum income supplement, are not transferable between countries. Payments from pension funds are generally transferable, but it is a good idea to check with the pension fund or funds concerned.

The processing time for a first time application is usually 14 weeks. Reassessment of disability pension usually takes six weeks to process. The waiting time is based on all pertinent documents being received by TR.

Disability pension payments are divided into three basic categories:

Disability pension: 58.222 ISK

Age-related disability supplement (100%): 58.222 ISK

Income insurance: 186.444 ISK

You can see more information about amounts in Icelandic here.

All taxable income affects the disability pension. This includes income from pension funds, work, capital income, etc. Income from private pension funds do not affect disability pension but can affect related payments. Social assistance does not affect payments.

Income from employment may be 2.400.000 ISK per year without affecting payments.

Payments from pension funds may be 328.000 ISK per year without affecting payments but do not affect basic pension.

Capital income may be 98.640 ISK per year without affecting payments.

Spouses income generally does not affect pension from TR. This refers to income e.g. from employment or pension fund.

Capital income, however, is defined as shared income with spouse/cohabitants and therefore the spouse’s capital income affects payments from TR. Total capital income is divided in half between spouses/cohabitants.

Entitlement to a disability pension arises from a 75% disability assessment. Various rights may accompany a disability pension where applicable, e.g. income insurance, household supplement, child pension, etc. Disability pensioners can also get a disability certificate which provides various discounts.

Entitlement to a disability grant arises from a 50% disability assessment. No additional rights are included in the disability grant except for those who have children under 18 years of age. A disability certificate is not issued when a person receives a disability grant.

If a pensioner is serving a prison sentence, all payments from TR are suspended.

If a pensioner is remanded in custody or is ordered to stay in an institution, all payments from TR will be suspended after four months of continuous custody or stay.

Once benefits have been suspended, personal allowance may be paid in accordance with paragraph 8, article 48 of The Social Security Act, No. 100/2007. You can apply for personal allowance from Tryggingastofnun.

When a prisoner completes his sentence in a halfway house, e.g. Vernd, or with electronic monitoring, pension payments will resume as long as entitlement is still in place. If a prisoner returns to prison, payments will be suspended from the first day of the next month.

If the pensioner has child support obligations and TR has allocated child pension towards child support, then it will continue if entitlement is still in place.

The spouse of a person who is in custody or in prison may be payed child pension for the children of the incarcerated person, as long as the detention has lasted for at least three months.

You can request to be paid once a year. The entitlements are calculated when a confirmed tax return is available and are paid once a year. By receiving payments once a year, the individuals receive exactly what they are entitled to and, for example, will not receive a claim of settlement due to overpaid benefits. Apply on My pages.

TR assists those who have worked within EEA countries to apply for disability pension from the country in question. The application process abroad can take up to 6 months.

Application for pensions from other EEA country can be found on My sites.

Disability pension payments are subject to various conditions, but payments can be suspended if these conditions are not met:

  • Payments are income related and are suspended if income exceeds the income threshold
  • If the recipient moves to a country outside of the European Economic Area (EEA, the United States or Canada
  • When disability assessment expires. It is important to submit an application for reassessment in a timely manner if illness is still present
  • If continuous stay in medical institution or residential home exceeds one month
  • When a pensioner is serving a prison sentence or deliberately avoids serving a sentence, all payments from TR are suspended
  • If a pensioner is remanded in custody, or in any other way ordered to stay in an institution, all payments form TR will be suspended after four months of continuous custody or stay
  • When pensioner passes away

It is allowed to work for ISK 2.400.000 per year without reducing the disability pension. It is best to look at the calculator to get an idea of payments.

Payments from Tryggingastofnun are taxable.

TR must be informed on the percentage of the personal tax credit to be used in calculating the entitlements. The first tax bracket is used unless otherwise stated.

You can register the personal discount and its use on My pages.

The reference income is all taxable income that individuals receive elsewhere. This is the income that individuals enter in the income estimate and TR uses as a reference for calculating pensions and related payments.

Reference income below the income threshold do not affect the calculation of the pension unless the person in question has a special pension supplement.

When calculating entitlements, annual income is always taken into account. So, it does not matter if the income comes in one go at some point in the year or in equal payments throughout the year. The total number in each income category (pension fund income, employment income or capital income) is calculated and divided into 12 months.

Income insurance and age-related disability supplement are automatically included in disability pension if the income is below the reference income.

Age-related disability supplement is based on the age at which an individual first received a disability assessment. The monthly payment is a percentage if the unreduced disability pension.

If a disability pensioner is liable for child support, the individual can receive a child pension, which is then used to pay child support. The child pension thus goes directly to the Municipal Collection Agency and not the pensioner.

A person who receives a disability or rehabilitation pension may be paid a special pension supplement for maintenance if it is shown that the person cannot support themselves without it, cf. Paragraph 2 Article 9 of The Social Assistance Act.

When calculating special pension supplement, 65% of the pensioner’s income is included in income. Compensation according to the Social Security Act and the Social Assistance Act are, however, fully included in the calculation of the benefit, with the exception that 50% of the amount of the age-related disability supplement is not included in the income.

The length of residence in Iceland can affect payments from TR. In order to receive full entitlements, you must have lived in Iceland for 40 years between the age of 16-67. If that period is not reached, the portion of payments will decrease in accordance with the time the individual has lived outside of Iceland.

A condition for payments is also that an individual has resided in Iceland for at least the last three years before the individual applies.

The same applies to residence in another Nordic country during the period according to the Nordic countries’ agreement on Social Insurance, the person must have been a resident in Iceland for at least one year after age 16.

The entitlement to disability pension ends at the time of death. Upon a person's death the estate becomes an independent legal person, which temporarily acquires all the rights and obligations of the deceased. The rights and obligations of the estate and the person's heirs towards the Social Insurance Administration depend on the probate of the estate.

Further information on the taxation of pensions in the Nordic countries can be found on the Nordic tax portal Nordisk eTax.