Old-age pension - increase in exemption limits and age supplement on old-age pension for those who previously received a disability pension

General exemption limit for old-age pension

From 1 January next year, the general exemption limit for old-age pension and social supplementary support for the elderly will increase by almost 20%, taking into account increases according to the budget.

The general exemption limit will be ISK 523,896 per year in 2026, or ISK 43,658 per month, instead of ISK 438,000 per year in 2025, or ISK 36,500 per month.

Age supplement – takes effect on 1 March 2026

An individual receiving an old-age pension who previously received a disability pension may now be entitled to an age supplement. The age supplement is income-related, and the combined amount of the old-age pension and the age supplement is reduced by 45% of the individual's income exceeding the exemption limits for the old-age pension. More information about the age supplement can be found here.

The age supplement for old-age pension will be implemented on 1 March 2026 but will take effect from and including 1 January 2026. TR will now begin preparing a new allowance category, which will be paid out from and including 1 March 2026. The first allowance will include payment for retroactive rights from 1 January 2026.

See also the news on the Government of Iceland website about the passing of the bill.