Benefit increases will cost Iceland nine billion kronur

Higher social security payments will increase state expenditure by around nine billion Icelandic kronur next year, mbl.is reported, rather than the four billion kronur cited by Education and Children’s Minister Inga Sæland.

Sæland has repeatedly referred to a four-billion-kronur increase, including at a meeting of the government’s female leaders on September 8, where priorities for the parliamentary session were presented.

The minister’s statement is consistent with the explanatory memorandum accompanying the budget bill, which links social security benefits to the wage index. However, the four-billion-kronur figure in the bill is based on an average from previous years.

In a written response to questions from Morgunblaðið about the discrepancy, the Ministry of Finance said the higher cost next year was partly due to the wage index being expected to rise considerably more in 2026 than benefit payments did at the start of the year.

The ministry also said the figure includes a one-time adjustment resulting from an increase of slightly more than 1 percent in the wage index between June and December 2025.