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Access Granted to Supplemental Pension Savings

The new Social Democrat-Left-Green coalition government, which took office yesterday, plans to change the laws on supplemental pension savings (séreignarsparnadur in Icelandic) so that people in financial difficulties can access their savings to pay their debts.

Usually supplemental pension savings, which are comprised of elective contributions from the employee and complementary contributions from the employer, accrue in a closed account that can only been accessed after the account holder retires.

Minister of Finance, Fisheries and Agriculture Steingrímur J. Sigfússon. Photo by Páll Kjartansson.

“A woman called me from north of the country, unemployed with three children, who has a considerable amount of money in such an account but currently has serious problems with making ends meet,” Steingrímur J. Sigfússon, minister of finance, fisheries and agriculture and chairman of the Left-Greens told Fréttabladid.

“Her words are grounds for an argument,” Sigfússon added. “She said that she would rather be able to feed her children this winter than to withdraw her savings once she has retried.”

Sigfússon said possible methods of to make the savings accessible will be discussed with representatives of the supplemental pension investment funds. “The plan is not to leave these funds wide open but to examine how people in dire need can be assisted. We could, for example, establish general regulations on limited access and also define people’s positions in that aspect.”

Former Minister of Finance Árni M. Mathiesen of the Independence Party said that he had been working on a bill on limited access to supplemental pension accounts. “It would have been introduced to the cabinet on Tuesday last week if there had been a meeting then.”

However, there is certain risk involved, Mathiesen reasoned. “Especially for the smaller funds that do not have plentiful liquid assets.”

“They might have to liquidate the securities that can most easily be sold to pay out supplemental savings, and then they would be left with securities that are not worth as much. Then those who still have money left in the fund could end up with worse assets,” Mathiesen explained.

Mathiesen stated the task list of the new government is more or less the same as what the Independence Party and Social Democrats had been working on together so that it had not been necessary for the Social Democrats to terminate their coalition with the Independence Party.

Click here to read more about the new government and here to read its seven-point task list.

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