The mandatory pension contribution in the Faroe Islands has reached its final legislative ceiling of 12 percent as of 2026. This mark completes a gradual increase that began in 2014, when the initial contribution was set at just 1 percent. Since the law’s introduction, the rate has generally increased by one percentage point annually, with the exception of 2015 and 2016, when it remained at 2 percent.
The 12 percent contribution applies to both A-income (standard wages) and B-income (self-employment or secondary income). With this final step, the long-term plan to ensure a robust pension system through mandatory savings has reached its intended target, providing a stable framework for future retirees.
Source: kvf.fo