On January 1, 2011, a new government pension system will replace the current system in Norway. As in many countries, the main reasons for the changes are increasing longevity and rising pension costs.
New benefit calculation system
The current points-based system using the best 20 years of earnings to calculate benefit levels will be replaced by a career-average plan based on allocations of 18.1% of annual income up to a maximum of 7.1 times the national insurance basic amount (in 2010, this was NKR 75,641). In addition, to reflect increasing life expectancy, the pension paid out will be calculated based on life expectancy when the pension begins. The accumulation of social security benefits will apply from ages 13 to 75. Each year counts. The more and longer the employee earns, the more he or she will receive on retirement.

Flexible retirement age
The retirement age is no longer fixed at age 67, but will be flexible. Retirement will be possible between ages 62 and 75. The longer the employee waits before taking the pension, the higher the benefit will be.

Benefit entitlement
Pensioners can draw between 0 and 100% of their benefits each year. Furthermore, pensioners can have a normal income without any reduction in the social security benefit.

Partial retirement
Partial retirement is allowed (20%, 40%, 50%, 60%, 80% or 100%).

Indexation reduced
As of January 1, 2011, the indexation of pensions in payment will be reduced. Previously it was in line with wage growth. In future, it will be in line with wage growth minus 0.75% per annum.

Phase-in based on year of birth
The new pension system will be phased-in based on the year of birth.
- For people born between 1943 and 1953, benefits will accrue under the old rules, but pensions can be earned until age 75.
- For people born between 1954 and 1962, benefits will accrue under both regimes, with the proportions under the old and new plans depending on the year of birth

Individuals born in 1963 or later will have their pension based entirely on the new system.

Arrangements for occupational pension plans

Since defined benefit occupational pension plans in Norway are integrated with the national insurance plan to provide an overall target benefit, the new rules will have a major impact on them. Due to the complexity of the adjustments needed to adapt occupational pension plans to the new state system, it has been proposed that on a temporary basis, existing defined benefit occupational plans and insured plans should continue as at present until modifications can be introduced.
However, the possibility of taking out the retirement pension benefit, from age 62 to 75 will also be possible.

Changes needing to be made to defined contribution plans (which are simpler than those required for defined benefit plans) are proposed for introduction on January 1, 2011.

New rules are expected from the authorities in summer 2011. Vital Forsikring and Swiss Life Network stay at your disposal for any question or clarification you might have or need.

Contractual early retirement pension plans (AFP)
The pension reform now allows early retirement, if certain conditions are met, from age 62 to 70. As a result, in 2010, several changes were implemented under the AFP plan. However, all current beneficiaries will remain entitled to their AFP benefits. It is recommended that new early retirement plans should be run as a kind of contribution schemes i.e. both the employer and the Norwegian State, pay in a negotiated premium for the benefit secured.