In a bid to level out the playing field between Iceland's pensions for public officials and the general public, the Minister of Finance has moved to abolish the Act that provides these pension privileges to senior public servants and politicians.

Act no. 141/2003 sees these officials, the President of Iceland, ministers, member of the Althingi and justices of the Supreme Court, receiving pensions massively in excess of common pension rights, and in accordance with the Government's Policy Statement, Minister of Finance Steingrímur J. Sigfússon has presented a bill to the Althingi, the Parliament of Iceland.

However, this is not the first time that the Act has come under fire. In the autumn session of Parliament, the Act was amended and the pension privileges curtailed, although as it presently stands, pension privileges are still well in excess of common rights.

The current proposal would see the Act abolished completely, to fully align the pension provision of these officials with those of other government employees. The exception to the rule will be to the present President of Iceland, and those justices of the Supreme Court that were appointed before the entry into force of the Act, so long as they remain on the
bench. Those who have acquired pension right under the Act will also be allowed to keep their pension rights.

As it stands, 77 presently employed individuals are benefiting from pension privileges, in addition to pension rights of those who were previously employed in their posts. At the end of 207 a total of 633 individuals enjoyed privileges due to the Act, which cumulatively amounted to a Treasury commitment of more than 12bn krónur.

When the Act takes effect, the Treasury's commitment will drop by 356million krónur compared to the end of 2007, and after four years the assessment shows that the commitment will be reduced by 1,689million krónur, the equivalent to 14 per cent of that at the end of 2007.

The Act was presented to allow members of the Althingi and ministers who had been in public life for a long period of time to retire and therefore make room for new public officials.

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