Faroese government keeps pension deduction for high earners

The Faroese government will not abolish the deduction from the national pension for retirees with high incomes, despite calls to end the practice.

From 1 January 2027, the system will be streamlined, with pension payments adjusted monthly based on the pensioner’s income tax assessment, meaning retirees will no longer receive back payments from the social security agency if they have worked more than expected, according to Margit Stórá, a government minister.

Stórá told the Faroese parliament that it is uncommon in other countries for retirees with high incomes to receive a social pension, with Denmark being one of the few exceptions. She acknowledged that the annual adjustment is seen by some pensioners as a disincentive to work.

The change was announced in response to a question from MP Sámal Petur í Grund about the pension deduction policy.