The Norwegian Pension System – What You Need to Know

The National Insurance Scheme – The Foundation of the Pension System

The National Insurance Scheme is the public pension scheme that as a general rule includes everyone who lives or works in Norway. This pension is based on your income throughout your life and how long you have been in the workforce. The basic rule is that the longer you work, the more pension you earn.

The pension reform, which was introduced in 2011, made it possible to flexibly withdraw old-age pension from the age of 62. An important goal of the reform is to encourage longer professional careers. The earlier you withdraw your pension, the lower the monthly payment will be, as the pension payments are spread out over a longer period. You can also choose to work while drawing pension without it reducing the payment from the National Insurance Scheme.

Even if you have little or no income from work, you still earn the right to an old-age pension from the National Insurance Scheme. Among other things, unpaid care work and receipt of disability benefits also earn you an old-age pension, and you also earn a guaranteed pension / minimum pension level for the time you live and/or work in Norway, regardless of whether you have income from work. 

For people who have lived in Norway for at least 40 years, the guaranteed pension / minimum pension level provides financial security if they have little pension through work. How much they receive in guaranteed pension / minimum pension level depends on their insurance periods and, among other things, whether they are single or have a spouse/cohabitant, and what their total income is.

Occupational Pension – Pension from Your Employer

Most employers today offer an occupational pension in addition to the National Insurance Scheme. Everyone working in the private sector is entitled to a mandatory occupational pension. This varies depending on where you work and which agreement your employer has.  If you work in the public sector, you are covered by a public occupational pension scheme, which provides a pension proportional to your income as employed. Public occupational pension is lifelong, which means that you receive pension payments as long as you live. 
Occupational pension is a top-up in addition to the pension from the National Insurance Scheme and is an important part of your total pension.

Private Savings – Your Opportunity to Increase Your Pension

Although the National Insurance Scheme and occupational pension provide a solid foundation, some choose to save extra for their pension on their own. This can be done through individual pension agreements (IPA), individual pension savings (IPS), or other forms of long-term savings.

Pension and Taxes

Pension income is subject to taxation in Norway. The tax on pension is calculated in the same way as for wage income, but there are some special rules and deductions that apply specifically to pensioners. For example, you may be entitled to a special tax deduction for pension income, which reduces the total tax you have to pay. It is important to be aware of these rules and deductions to ensure you pay the correct tax on your pension.

What Is Your Responsibility?

Although the pension system automatically records your income and calculates your pension earnings, it is important that you stay updated. You can log in to Norsk pensjon or NAV’s pension calculator at any time, to see how much you have earned in pension so far and estimate what you can expect to receive in the future. This gives you a good basis for deciding whether you want to work longer, withdraw your pension earlier, or save extra.

Calculate Your Pension

If you want an overview of what you can expect in pension, there are simple tools available online. By logging in with BankID on NAV’s pension calculator, you can get a personal calculation based on your income and previous earnings. This is a way to get an overview of which choices affect your future pension.