The most favourable sav­ings op­tion?

We can all agree that saving is important — but is one savings option better than another?

Supplementary pension savings is a type of private pension savings. This arrangement allows an employee to contribute up to 4% of their gross salary to additional pension savings, with the employer paying a 2% matching contribution. Supplementary pension savings have long been regarded as an important supplement to disposable income in retirement. Another advantage is that it is a convenient way to save. Sometimes, however, these savings have seemed distant, difficult to monitor, and therefore less exciting. We've solved this with the introduction of pension services in the Arion app.

On average, around 50 to 66% of the workforce contributes to supplementary pension savings, and the gender split is fairly even, although men hold around 60% of the savings and women about 40%. The case for contributing to this type of saving is strong:

• 2% salary increase through employer matching contributions

• Flexible withdrawals from age 60

• The savings are inheritable

• Cost-effective housing finance

• Tax advantages

We certainly encourage people to save independently, It always pays to do so, whether to build up a fund to cover unexpected expenses or to save for something enjoyable — ideally both.

The advantages of supplementary pension savings are clear, and they are such that it generally makes sense to use this type of saving as a foundation for retirement.

To better understand the impact of saving 2–4% of your salary each month and receiving a 2% matching contribution from your employer, you can enter your details into the calculator on the Arion website.

Using your savings to buy your first home

The savings can be used when purchasing your first home. This arrangement, known as "first home," allows those who contribute to additional pension savings to use up to ISK 500,000 per year over a ten-year period — that is, up to ISK 5 million in total — either to make tax-free payments towards their mortgage or to withdraw part of the savings at the time of purchase. Married couples or cohabiting partners can also benefit from the measure, in which case the annual limit of ISK 500,000 applies to each individual, allowing a combined total of up to ISK 10 million over the period. This measure has proven to be good support for first-time buyers in recent years and has been well-received. Recently, those who haven't owned a home in the past five years have also been authorized to use this measure.

Responsible investments

The main role of Arion's supplementary pension savings is to grow the savings and achieve the highest possible return, taking risk into account. The goal is to build up substantial savings for retirement and, where appropriate, to use part of the funds to help finance housing earlier in life. Investments can also influence quality of life in ways beyond financial returns alone. In recent years, increasing emphasis has been placed on environmental criteria, social factors, and governance in investment decisions, and a policy on responsible investments has been developed. Among other things, investments are made in the development of business and infrastructure both domestically and abroad, thus impacting society as a whole.

We encourage everyone to familiarize themselves with the responsible investment policy, different investment options and returns, as well as the economic benefits of this savings format.

Supplementary pension savings in the app

It is easy to set up a supplementary pension savings agreement in the Arion app. The app also allows you to track your balance and its development from the start, view your projected position at retirement, estimate monthly payments, and, once you reach the reference age, submit an application for withdrawal. Those who use their supplementary pension savings to repay a mortgage can view an overview of their allocations and check whether the payments are active. In addition, you can transfer other supplementary pension savings to Arion in a simple and convenient way, giving you a clearer overview of your total savings.