About pensions

All individuals up to the Faroese state pension age of 67, with full tax liability in the Faroe Islands, are required by law to contribute at least 12% of their salary to a pension scheme.

Individuals born before 1 January 1954 are exempt from this requirement, but can make a voluntary pension saving.

The legal requirements for a work-related pension mean that every type of payment of wages is subject to an obligatory pension contribution; this also includes committee payments, secondary jobs, overtime work, holiday allowance and more. 

The requirement of pension contributions is so concrete that if you do not contribute to a pension, your wages cannot be paid.  

The pension is your personal property. However, you are not in charge of it, and you cannot withdraw it early. Nor can it be given away, be pawned or used to offset possible requirements from the pension provider. 

The pension counts as a part of the joint estate when couples separate or get divorced. Annuity, however, cannot be repurchased. 

Studying in the Faroes

If you are a student in the Faroes and you have an income, other than the student grant, you are required to contribute the fixed amount of your wages to a pension scheme. You are not required to pay pension contributions off your student grant. 

Studying abroad

If you are a student abroad and have retained full tax liability in the Faroes, you are not required to pay pension contributions off the income you have earned abroad. However, if you are working in the Faroes during certain periods of time, such as during the summer holiday, you must contribute an amount of these wages to a pension scheme in the Faroes. 

Please note that if the single payment of wages is so small that the pension contribution would be less than DKK 30, you are not required to make the pension contribution. 

Pension schemes are often included in employment contracts. If not, you can start saving for a pension by joining a pension scheme with a pension provider in the Faroe Islands. The pension provider will give you an account number, which you should give to your employer. Your employer must then pay the pension contribution into your pension account.

You can find pension providers in the Faroe Islands under Relevant links.

If you come to the Faroe Islands for fixed-term employment, you can apply for a refund of your pension contributions when you leave the Faroe Islands.

To qualify, your stay must not have lasted more than 60 months. If you have already received a refund under this rule and return to the Faroe Islands for fixed-term employment, any new pension contributions cannot be refunded until 10 years after you leave the Faroe Islands again.

To apply, use the form “Request for a refund of pension contributions”. You can find it under Files.

Faroese residents, who are working abroad for a foreign employer and who, as a part of their employment contract, contribute to a foreign pension scheme, may be exempt from paying Faroese pension contributions off their wages earned abroad, if they meet the necessary requirements.

Find the application form under files.