Iceland pairs a residence-based state pension (accruing over 40 residence years between 16 and 67) with powerful mandatory occupational funds taking at least 15.5% of pay — the occupational layer, not the state one, carries most Icelandic retirement income. The 2019 agreement coordinates the state layer with U.S. Social Security.
U.S. retirement benefits normally need 40 quarters (10 years) of credits. If you split a career between the U.S. and Iceland, you might fall short in each country alone. As long as you have at least 6 quarters of U.S. credits, the agreement lets you add your Iceland credits to reach eligibility — the U.S. then pays a benefit pro-rated to your U.S. credits only.
A Certificate of Coverage is the document that proves you're exempt from one country's social security. For U.S. coverage, the employer requests it from the SSA Office of Earnings & International Operations. Iceland's authority issues the equivalent when Iceland covers you.
Under the U.S.–Iceland agreement, a worker sent by a U.S. employer for 5 years or less normally stays under U.S. Social Security only and is exempt from Iceland's system. Your employer obtains a U.S. Certificate of Coverage as proof. Beyond 5 years, coverage shifts to Iceland.
Yes. If you have at least 6 quarters (about 1.5 years) of U.S. credits, the agreement lets you combine ("totalize") your U.S. and Iceland credits to reach the 40-quarter (10-year) threshold for a pro-rated U.S. retirement benefit.
The agreement has been in force since 2019.
Pension taxation depends on Iceland's domestic law and the separate U.S.–Iceland income tax treaty (if any), not the totalization agreement. The totalization agreement only governs which country's social security system covers you and how credits combine. Confirm pension taxation with a cross-border tax advisor.
Likely yes, in the occupational layer: Icelandic employers must pay at least 15.5% of wages into a lífeyrissjóður fund whose rights vest to you personally and are payable abroad at retirement under the fund's rules. The residence-based state pension adds a small prorated slice, coordinated with U.S. periods under the 2019 agreement.