What you need to know about the different types of pension in Norway

Regardless of whether you just moved to Norway and have an interest in familiarising yourself with its pension and benefit rules or if you have been working in the country for some time – it's always a good idea to know the key aspects of the pensions system of the country where you live.

Here we take a look at the key things you should know about the three different pension schemes in Norway: the retirement pension from the National Insurance Scheme (i.e., state pension), occupational pensions from employers, and private pensions.

State pensions

Generally speaking, you must have had pensionable income and/or have been a member of the National Insurance Scheme in Norway for a minimum of 5 years to be eligible to claim a state retirement pension.  

READ MORE: Five key things you need to know about Norway's state pension

While the retirement age in Norway is 67, you have the right to start drawing a retirement pension from the month after you turn 62 – if you have sufficient earnings to do so.

It is up to the individual to decide if they want to continue working while receiving their retirement pension. Furthermore, you have the discretion of choosing when and how you would like to draw your state pension.

You need to contribute to the National Insurance Scheme for 40 years or more to get the full minimum pension level in the country.

However, if you haven't been able to get 40 years of coverage, then the minimum pension level will be reduced accordingly.

Note that there are also a number of individual factors – such as your marital status – that will affect your monthly pension payments.

If you want to get a precise calculation of your retirement pension, use the Norwegian Labour and Welfare Administration's (NAV) online tool, Din pensjon.

One last thing to note is that you may be able to take your Norwegian state pension with you when you move countries. 

READ MORE: Can you claim your Norwegian pension from another country?

Pension from employers

In Norway, the public and private sectors are covered by an occupational pension scheme, and most employers are required to set up a plan for their employees.

There are different types of occupational pension schemes, so make sure to get in touch with your employer to find out which type applies to your individual case.

According to the Norwegian Act on Obligatory Occupational Pension (available here in Norwegian), pension schemes must be either defined as contribution-based or benefit-based. It is up to the employer to pick a type.

Among the various types of compulsory occupational pension schemes, the following stand out as the most prevalent – according to Altinn's web pages:

• Defined contribution pensions: The most common pension scheme, through which annual contributions are determined as a percentage of salary (with the minimum set at 2 percent). Pension disbursements in this scheme depend on the contributions to the pension fund and the return generated on the fund.
• Defined benefit pensions: In this scheme, employees are entitled to a predetermined level of combined pension, which also takes into account the pension from the Norwegian National Insurance scheme. The premiums vary from year to year and increase following pay rises.
• Occupational pensions: Occupational pensions are a mix of defined contribution and defined benefit pensions. During the accrual period, employers build up the members' pension fund through annual contributions determined as a percentage of salary. Furthermore, the pension fund guarantees fixed pension payments from retirement age.

Generally, a pension from employers is paid out from age 67; however, in some cases – especially in the public sector – employees may have the right to early retirement.

Remember that the amount of your occupational pension payments depends on multiple factors, including the period over which the pension will be paid out and the amount saved for you.

Private pensions

Many people in Norway opt for private savings to boost their retirement pension income. There are different savings products and options on the market, and you should study these with care before choosing.

For example, DNB - Norway's largest bank - offers savings with investment options, savings with the annual minimum return, and several other products.

Take note of your individual circumstances and risk tolerance when picking private pension plans, as your savings might be inaccessible until retirement with no option of early withdrawal.

On the other hand, some savings programs offer the possibility of early withdrawal but might not provide the same benefits.

Make sure to check whether the personal pension savings product you're looking into offers tax-deductible components.

In order to ensure that you have a higher level of financial security when you retire, you might also want to consider paying off some of your debt.