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Working in Norway

How pensions work in Norway

Sept. 16 2022

These are the things you need to know about before starting work in Norway.

Before you start working in Norway, or you apply to work in Norway, it might be a good idea to wrap your mind around how the Norwegian pension system works here.

Your pension comes from three separate sources:

  • The National Insurance Scheme (“Folketrygden”)
  • The occupational pension scheme (“Tjenestepensjonsordning”)
  • Personal pension savings 

How much each of these three contributes to your overall pension, differs from country to country.

Anders Kvam works as head of negotiations at Tekna, and has a great deal of experience with pension schemes.

“In a lot of countries, your pension is something you have to take care of completely on your own. Norway is all the way at the other end of the scale, where it’s largely taken care of or regulated by the government,” says Anders Kvam, Tekna’s head of negotiations.

Below, we’ve asked Kvam to elaborate on how these different fractions work and what anyone coming to Norway should know about pensions.

Norwegian National Insurance Scheme (“Folketrygden”)

For most people living in Norway, the National Insurance Scheme will be the biggest contributor to their pension.

In Norway, your pension is largely taken care of by the government. Besides paying your taxes and filling out your tax forms each year, there isn’t much required of you to receive it.

The general rule goes: Anyone who lives in Norway or who’s employed in Norway, is an eligible member of the National Insurance Scheme. There are, of course, certain rules and regulations, which are listed by NAV – the Norwegian Labour and Welfare Administration.

“Most people get most of their pension benefits from here. The amount you get from the National Insurance Scheme is based on your yearly pay,” says Kvam.

“No matter where you work or what you do for a living, you’ll receive pension benefits from this scheme. NAV bases your yearly accrual on data from your yearly tax settlement.”

Kvam explains that the yearly accrual is 18.1 percent of your wages up to 7.1 G, but you do not receive accrual for earned wages beyond 7.1 G.

Hence, on this end, there isn’t necessarily a lot you have to do yourself to receive your pension benefits – besides paying your taxes, of course.

After only a year as a registered employee, you can sign into NAV and look at your earned pension benefits.

The occupational pension scheme (“Tjenestepensjonsordning”)

Besides the National Insurance Scheme, as a person working in Norway, you will also receive pension benefits through your workplace.

“Your employer is bound by law to give you pension benefits, in addition to the National Insurance Scheme. These two are not directly connected to each other,” says Kvam.

Kvam encourages everyone to use the pension calculator on the NAV website. If you have been employed for a year, this tool gives a good estimate of how high your pension will be.

The occupational pension scheme is a statutory good found in any enterprise with more than one employee. It requires your employer to pay a certain amount of your salary towards your pension.

The public sector

What sort of occupational pension scheme will count for you, depends on which sector you are employed within, as different rules apply to the two.

In the public sector, rules are set for how much your employer is required to pay towards your pension. This remains unchanged for all employers in the public sector.

As of 2022, the minimum rate is set at 2 percent of your wages between 1 G and 12 G. The maximum rate is at 7 percent with a roof cap of 7.1 G.

These funds are put into a saving scheme. You’ll be able to access them when you become a pensioner, or from the day you turn 62.

“This is a decent scheme, and it is what it is. You can freely switch between employers in the public section without causing any issues with your pension.”

To check on your earnings, you will normally be required to sign in digitally on your supplier’s website. Often, this supplier will be either KLP – Kommunal Landspensjonskasse – or SPK – Statens pensjonskasse.

The private sector

If you’re working in the private sector, what you receive from your employer varies greatly.

Your employer is obliged to pay a minimum amount of 2 percent of your wages towards your pension (up to a salary of 12G). The maximum is 7 percent, but for wages between 7.1 G and 12 G they can give a supplement saving up to 18,1 percent. This adds up to a maximum rate of 25.1 percent.

In other words, the variations between the workplaces can be quite significant.

“There are a multitude of schemes that differ in how they work, not to mention how good they are. The variations are great here, so the schemes can be incredibly good – or terribly bad,” says Kvam.

Ask about pension schemes!

Kvam underlines that we tend to ignore the question of pension schemes in favour of the salary when we look for jobs – something we definitely shouldn’t do.

“You have a little job to do here to familiarise yourself with how good the occupational pension scheme is with your potential employer,” he says.

“For instance, if you are out looking for employment or you get a new offer from your current employer, you shouldn’t just be looking at how much the job pays. It's important to ask about the pension as well.”

“Both are important parts of the package offered to you by your employer,” Kvam says.

“AFP” – For employees within collective bargaining agreements

In addition to the three-part pension system explained above, employees in enterprises with collective bargaining agreements also have an additional scheme to factor into the equation: ”AFP”.

The AFP offers different perks in different sectors.

In the public sector, it’s a contractual early retirement pension scheme. If you are within the ages of 62 and 65, you can receive these benefits based on the provisions in the National Insurance Act.

In the private sector, it’s a contractual retirement pension scheme that offers quite a significant addition to your pension – as long as you remain employed by enterprises that offer AFP.

What’s important to note is that to receive AFP, you have to meet the right conditions at the actual point of receiving the funds. It does not add up each year like other pension schemes.

Hence, if you end up not meeting the right criteria when you were set to get AFP, you might lose the right to the funds completely.

Personal pension savings – IPS

The final part that makes up your pension, is the savings you put away on your own.

“In Norway, there aren’t many pension schemes that allow for you to make personal payments towards your pension. Unlike many other countries, the possibilities are actually quite limited here,” says Kvam.

Actually, there’s only one scheme available: IPS (“individuell pensjonssparing”, or individual pension saving).

“Here you are allowed to pay a yearly amount towards your pension, effectively locking away those funds until you turn 62. In return, you’re offered some tax benefits or tax deferrals.”

Useful links:
nav.no (eng)
Pension in Norway (tekna.no)

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