Death benefits are paid to the deceased estate and are deposited into the bank account of the estate or the bank account of the heirs.
The following documents must be submitted with the application:
A progress overview of the distribution of the estate from the District Commissioner
An authorization from other inheritors (if the deposit should be made to an inheritor’s account)
If a member was on payroll at the time of death
Death benefits payable for a member who was on a payroll at the time of death, and who is younger than 70 years old can amount to ISK 427.134 .- for full time employment (benefits are paid proportionally by job percentage), if premiums were paid on behalf of the member
for a minimum of 6 consecutive months prior to the member’s death.
Death benefits payable for a member who was on a payroll at the time of death, and whose premiums have been paid for at least 4 consecutive years, can amount to ISK 533.918 .- for full time employment, and are paid proportionally by job percentage. If a member, who according to those conditions is entitled to death benefits, is deceased after retiring, ISK 16.169.- are deducted for each month that has passed from retirement until time of death, (excluding the first 6 months).
The amounts stated above are subject to changes in accordance with the index of consumer prices in January each year.
If a member was not in the labour market
If the deceased was not in the labour market but was a fund member at the time of retirement, a certain portion of death benefits can be paid to the estate, to meet the cost of the funeral. A condition for payment is that the deceased must have been a member for the 5 consecutive years prior to retirement due to old age or disability.
Reimbursement amounts in this category are up to ISK 100,000.
Death benefits are not taxable but listed in the estates tax return.