Contractual Retirement Pension in the Public Sector

• It is not an insurance scheme, so there is no membership; rather, individuals whose employer takes part in the scheme can apply for a pension from this scheme if they fulfil the qualifying conditions.
• Public sector employees born in or after 1963 are eligible (for individuals born before 1963, the AFP scheme is a fixed-term early retirement scheme).¹

General finances

• PAYG financing from state and municipal budgets. 

Contribution rates

• To be determined. 

Taxation of contribution payments

• Not applicable.

• Statens Pensjonskasse (SPK); Kommunal Landspensjonskasse (KLP) and ‘The Norwegian National Insurance Administration’ (NAV).

Qualifying conditions

• Qualifying age: 62 years. 
• If taking the pension before 70 years of age, the pension needs to be drawn alongside a minimum of 20% of the pension from the national insurance system. 
• Individuals need to have worked in a company with AFP for at least 7 out of the 9 years before reaching the age of 62.
• The individual must make a claim for the AFP pension, it is not automatic.

Combining employment & retirement

• AFP can be combined with wage income without an earnings test.
• AFP can only be drawn at a rate of 100%.

Pension benefits

• Lifetime supplementary pension to pension from the national insurance system. 
• Based on income over life course as well as income-equivalent periods corresponding to those in the national insurance system (but based on period between 13 and 61 years).

Benefit calculation

• Annual AFP = 0.314% of previous annual income up to 7.1 G received between age 13 and 62.
• Adjusted to life expectancy coefficient. 
• Indexed according to wage growth minus 0.75%.

Taxation and social security contributions on pension payments

• Pensioners pay reduced social security contributions (5.1%, compared to 8.2% for employees).
• All pension income is subject to taxation; a tax reduction of up to NOK 30,000 is granted to pensioners.