Iceland: New legislation reforming the public old-age pension system

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Parliament has just adopted a major simplification of the public pension system, aiming to reduce three benefit types to one unitary old-age pension benefit. Calculations in the income-testing mechanism are also to be simplified. This will be combined with a gradual rise in the statutory pensionable age (from 67 to 70) and a significant short-term rise in the level of pension income for the majority of pensioners. Work incentives will however be significantly reduced. This will be effective as from January 2017.

Author: Stefán Ólafsson