AFP in the Private Sector – How the Scheme Works

Contractual early retirement (AFP) in the private sector is a lifelong supplementary pension paid in addition to the state retirement pension from the National Insurance Scheme (Folketrygden). The scheme applies only to companies bound by a collective agreement that includes AFP. If your employer has several locations, the collective agreement must apply to the specific workplace where you actually work – otherwise you are not covered by the scheme.

Who is entitled to AFP in the private sector?

To be entitled to AFP, you must meet the following conditions at age 62 (even if you draw the pension later):

• Have worked at least 20% in a position with an AFP-covered company for at least 7 of the last 9 years.
• The position must have been your main employment.
• Other income must not have exceeded the salary from the AFP position.
• Not have received a severance payment or pension from an employer exceeding 1.5G (NOK 195,240) in any of the years between ages 59 and 62.

Examples of other income that may mean you do not meet the requirements:

• Income from work in organisations not covered by the AFP scheme
• Self-employment income from a business in which you hold a significant ownership interest
• A pension from another employer that exceeds the income from the AFP position

What about temporary layoff or leave from work?

• Temporary layoff: You are still considered to be in employment and retain your seniority.
• Release from the duty to work during a notice period: You will normally not meet the conditions, except in cases of bankruptcy or redundancy (see afp.no).

Requirements at the time of drawing the pension

• You must have worked for an AFP-covered company for at least three consecutive years immediately before drawing AFP.
• The position must be at least 20%.
• You may have been absent for up to 26 weeks, or 104 weeks due to illness – provided you were in the scheme at the beginning and end of the period.
• You must be in the scheme at the time of drawing the pension. You cannot apply retrospectively after you have left.

You must draw your state retirement pension at the same time

To draw AFP, you must simultaneously draw your state retirement pension from the National Insurance Scheme. The pension may be drawn in full or in part, and you may stop it at a later date. You do not need to leave your job – you may continue working in the same position.

How is AFP calculated?

• Based on pensionable income up to and including the year you turn 61, up to 7.1G (NOK 924,136).
• You accrue a benefit equivalent to 0.314% of your income per year.
• The benefit is lifelong and not subject to grading.

Special rule for those born 1963–1965 with a public sector background

Were you born in 1963, 1964, or 1965 and have previously worked in the public sector? You may be entitled to AFP from the Norwegian Public Service Pension Fund (SPK) if you would have met the conditions for private AFP had your time in the public sector been counted.

This applies in particular to those who have moved from the public to the private sector and risk falling outside both systems. Contact SPK for an assessment.

Read more at afp.no

AFP in the private sector must not be confused with AFP in the public sector. In the public sector, a distinction is made between those born before 1963 and those born after.

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