Thinking about a new job? Don’t forget to check out the pension benefits
How much will my new employer save toward my pension? What kind of pension might I get in the public sector? And what about AFP? Tekna attorney Arild Hølland tells you important things to remember when switching employers.
Many people change jobs up to several times over the course of their career. When starting over, your job description and salary are of course important factors to consider. At the same time, remember that your future pension will also be affected whenever you get a new employer. Tekna attorney Arild Hølland says that a lot of people can benefit by getting a good explanation of their future pension plan before switching jobs.
How much can your new employer save for your future pension?
"You should find this out, because in the private sector there’s a wide spectrum of pension plans. How much your employer can save for you can vary from 2 % of your salary up to 7 %. Out of the portion of your salary that’s between NOK 842,200 (7.1 G) and NOK 1, 423, 440 (12 G), your employer can save even more, up to 18.1%. The differences are just as great in cases of disability or death," he says.
You should find out what your new employer can offer you, because in the private sector at least, there’s a wide spectrum of pension plans.
Can an employer give an individual employee a better pension plan than other employees get?
"Your employer has to apply the same pension rules to all employees, and you can’t make any deal that gives you a larger amount than others are getting. So if you’re offered a pension plan with a low contribution rate, this could be a point you could bring up during salary negotiations. It might be easier for your employer to raise your salary than raise the pension amounts in an entire company."
What about contractual pensions in the private sector (AFP) if you change jobs?
"A lot of private sector employees have an AFP plan, so check out what kind of plan your new employer has. According to current rules, you have to be a member of the plan for at least seven years between ages 53 to 62. And any time spent working in the public sector doesn’t apply here. You have to work for an employer who offers an AFP plan when you want to withdraw it. There are also a number of other conditions. If you do get AFP, the collective payments can add up to the millions."
What kind of pension might I get in the public sector?
If you’re going to work in the public sector, it’s easier to find out which rules apply to you. Currently, all employees born in 1963 or after get a lifelong age-related pension, where the earnings equate 5.7% of your income. And additional savings of 18.1% of incomes over NOK 842,200. In cases of disability and death, public sector employees are covered by good pension and insurance policies.
All public sector employees are also a part of an AFP plan; for employees born in 1963 or later, this AFP plan is more or less the same as that offered in the private sector. There’s talk of making AFP in the private sector being calculated as time in the plan, but legislation specifying this new idea hasn’t been passed.
What about The National Insurance Scheme (Folketrygden)? What kind of rights can employees earn here?
In The National Insurance Scheme you earn money toward your old age pension based on earned income up to NOK 842,000. From this amount a pension account accrues that’s equivalent to 18.1% of your income. When you want to withdraw your pension, you’ll get a lifelong pension; but the calculation’s based on statistics showing how long you’ll most likely live. These rules apply in full starting with employees born in 1963 and after.
Important points to remember when changing jobs:
- Find out how much your employer will save toward your pension.
- Remember mber to look at it in connection with the salary being offered; this is how any saving is calculated.
- Lower pension savings should be compensated with a higher salary.
- If you switch between the public and private sectors, remember AFP. You have to fulfill the requirement about working for 7 years in the sector you’re entering in order to have the right to keep AFP. (At this time legislation about combining time spent working in both the public and private sectors hasn’t been passed.)
- Check out what applies in cases of disability or death; your employer should provide you with good insurance coverage.
- If you change jobs in the public sector, the pension plan offered by your new employer applies to you; and you can also transfer your rights from your previous employer to your new one.
- If you change jobs in the private sector, you can take your earned pension along to your new employer’s plan; you have your own pension account there, if you don’t want to move to a pension provider that you yourself choose.
- Log on to norskpensjon.no to get a summary of your earned pension rights.
Do you have more questions about pension? You can find more information about the different types of pension and answers to other pension questions here.