The Icelandic Confederation of Trade Unions (ASÍ) has reiterated its opposition to government plans to abolish contributions designed to equalise the disability burden across pension funds, warning it would “significantly impact” the pension rights of working and low-wage members.

In a resolution adopted by its central committee on 17 September, ASÍ claimed the government’s plans would effectively dismantle a long-standing social partner agreement.

The equalisation arrangement, first introduced in 2005, was intended to spread the costs of disability pensions more evenly between pension funds.

However, ASÍ stressed that the government is now seeking to withdraw from the agreement unilaterally, without negotiating a new mechanism to ensure balance across funds.

The reforms were initially announced under the previous administration as part of a wider overhaul of the social security disability system, which came into effect at the end of last month.

In response, Iceland’s largest pension fund, Gildi, warned that the changes will lead to lower old-age pensions so that pension funds can accommodate the higher disability payments.

Echoing this, ASÍ said that workers had already borne costs under these reforms, with pension rights effectively offsetting benefits paid to disability pensioners.

Despite opposition to the changes, the current government has confirmed it will continue with the plans and is also considering cuts to unemployment insurance rights in order to meet residual costs.

ASÍ has urged the government to reconsider its approach and to engage with social partners to secure an alternative arrangement.

“ASÍ will never agree to let working and low-wage workers alone bear the burden of the unequal burden of disability through further reductions in their pension rights in the name of streamlining state operations,” the union body stated.

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