Pensions in Norway

Saving for old age is critical for us all. Here's an English language guide to the daunting world of pensions and saving for retirement in Norway.

With a high cost of living, retirement in Norway can seem like a daunting prospect. We’ll try to demystify it a little for you.

Previously, many people have been able to rely on the state pension. But as the demographic shift continues at pace, an ageing population means that Norway’s future pensions will be smaller. For most people, private savings will be necessary to provide a comfortable retirement.

The retirement age in Norway presently stands at 67. Many people, especially those who have worked their entire career in the public sector, retire early at 62.

Retirement savings in Norway

As with many countries, Norwegian pensions fall into three distinct types: Pension payments from the National Insurance Scheme, pension from employers, and private pension savings.

Read more: Cost of Living in Norway

Many people have a mix of all three types. If you’re a foreigner living in Norway it’s especially important to learn about each of these three elements so you can plan for your retirement, regardless of where you plan to retire.

Now, let’s look at each of the three elements in turn, starting with the state pension.

Pension from the Norwegian state

Anyone who has lived or worked legally in Norway for at least five years after the age of 16 is entitled to a retirement pension from the Norwegian state.

This applies to those who have held tax residency in Norway. If you’ve been paying into the Norwegian National Insurance Scheme for at least five years, you will be entitled to a state pension.

Read more: Norway Stats: Facts & Figures in 2020

Generally, you must continue to be a member of the National Insurance Scheme to be entitled to a retirement pension from Norway, but there are exceptions to this rule.

Depending on your personal circumstances, you may choose to start receiving a state pension at any time from ages 62 to 75.

The amount of money you will receive is dependent on how many years you have been tax resident in Norway and many other factors. Unlike most other types of pension, the state pension is paid out for as long as you live.

There is a minimum guaranteed payout that varies depending on how many years you have been a member of the National Insurance Scheme. As of 2020, the amount varies from NOK 158,621 to NOK 193,188. Note that this is a guaranteed minimum, and not the amount you will necessarily receive.

To check the amount you will be personally entitled to, you can contact NAV, or check on Din Pensjon. The website has a pension calculator that will estimate the payout you will receive upon retirement.

Pensions from employers

Employees in both the public and private sectors are covered by an occupational pension scheme. The types of pension scheme vary, and in some cases the risk profile of the investment is controlled by the employee.

Read more: Work in Norway

Contact your current and previous employers to find out the types of pension schemes that apply to you. In most cases, employment pension is paid from the age of 67.

In addition, public sector employees and some private sector employees may be entitled to an early retirement pension by contract.

The size of the occupational pension you will receive upon retirement will depend upon how much has been saved for you, the returns on your savings investments, and the number of years it will be paid out over.

Private pension savings

Private savings can also boost your retirement pension income. There are various different savings products designed for long-term pension savings.

One of these is the IPS, also known as individual pension savings. This is a savings instrument that offers people a tax break today to encourage long-term savings. The downside is that the money is locked up, so it's only worth opening an IPS if you have some money to spare.

The best product for you depends upon your personal circumstances and attitude to risk. In some cases, any savings will be locked away until retirement, with no possibility for early withdrawal.

Pension changes in 2021

To reflect the increasing importance of not relying on a state pension for retirement income,

the Norwegian government has introduced a new individual pension account that will come into force from January 2021.

Around 1.5 million private sector employees will now collect their pension earnings from defined contribution pension schemes in a separate pension account. The account will follow the employee through their working life to provide lower costs and a better overview of pension savings.

Employees in companies that have a defined contribution pension scheme will now collect their pension earnings from previous employments (pension capital certificates) and manage this together with the pension capital the employee earns with their current employer.

An employee has the right to opt-out of this, but this must be done within three months of being notified of the change.

Living abroad with a Norwegian pension

To take advantage of lower living costs, many retired Norwegians choose to live out their retirement in another European country.

Spain is a favourite, with several towns home to a significant Scandinaivan population. Some instead choose to retain their Norwegian residence but spend the winter season in a warmer climate.

In most cases, it’s possible to continue receiving a Norwegian state pension when living in another country, although there can be issues with healthcare coverage.