New - partial incapacity and functionality

General

A new partial disability pension from 1 September 2025 is for those who are assessed with a 26-50% ability to function on the labour market according to an integrated expert assessment.

Part-time disability pensions are intended to provide financial support to individuals with the ability to be active in the labour market and to be an incentive for employment, where the threshold for earnings on the basis of the job is increased.

For whom

Persons who are assessed with 26 - 50% ability to be active in the labour market according to integrated expert assessment due to long-term or serious health or disability. Part-time disability pension is intended for those who have the ability to be part-time on the labour market.

Amount of partial invalidity pension

The amount of partial disability is 82% of the full disability pension payments at any given time, but the general 100.000 ISK threshold is supplemented by a 100.000 ISK threshold for monthly employment income. See amounts here

A person with a partial disability pension can therefore earn up to350.000 ISKa month without affecting payments from the Social Insurance Administration. The effect of income is a 45% reduction in amounts above the free income limit.

Age add-on

Those who are entitled to disability or partial disability pension can receive an age supplement, subject to certain conditions. Age supplements are not paid to those who are entitled to sickness or rehabilitation payments.

A full 30.000 ISK supplement will be paid to those aged 18 to 24 years old when either the criteria for a rehabilitation pension were first met or when the disability assessment was first approved. This applies whether the first disability assessment took place before or after 1 September 2025. The amount will be reduced by 5% from 25 years of age until 44 years of age and will not be paid to those over 43 years of age at the time of the first disability assessment.

Example: If a person receives an approved rating for the first time at 25 years of age, the person concerned will receive 95% of the full age supplement.

Example: If a person receives an approved assessment for the first time at the age of 43, the person concerned receives 5% of the full age supplement and keeps that payment.

Age supplement is income-related and reduces the combined amount of pension, household allowance and age supplement if about 45% of the pensioner's income exceeds the exempt income limit, until it is cancelled.

Part-time disability pension and activation allowance

Those who are entitled to a partial disability pension can receive an activation grant from the Directorate of Labour for up to 24 months while an individual is actively seeking employment with the assistance of the Directorate. The combined amount of the partial disability pension and the activation grant amounts to the total amount of the full disability pension.

Activity levels

is paid to those who are entitled to a partial disability pension and are actively seeking employment. It is paid by the Directorate of Labour, which provides individualized support in the search for employment. It is not income-related.

Home allowance

The current conditions for home allowance, do not change in the new system

The home allowance is income-related and reduces the total amount of pension, home allowance and, if applicable, an age supplement by 45% of the pensioner's income above the free-income limit, until it is eliminated.

Child pensions

Child pension payments will not be changed in the new scheme; those who receive a partial invalidity pension will be entitled to full child pension payments

On disability grant and with a valid disability assessment until 31. July 2025 or less

Those who receive disability grants and have a valid disability assessment until 31. July 2025 or less must undergo a standard reassessment.

An application for a reevaluation must be submitted by 1. September 2025. If the reevaluation is approved, they will receive permanent disability grant payments from 1. September 2025. After that time, it will not be possible to apply for disability grants.

Those who receive disability benefits may apply for a disability pension or a partial disability pension after 1. September 2025 and must then undergo an integrated expert assessment. If they do not qualify for either a disability or a partial disability pension, they will still retain the disability grant.

Those who have disability benefits will receive further information from the Social Insurance Administration on their status in the new system when the changes are closer.