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ENERGY

Norwegian government to increase energy bills subsidy to 80 percent

Norway’s government says it will further increase a subsidy for energy bills as households struggle with rising electricity prices.

Pictured are power lines in Drammen, south-east Norway.
The government has said it will increase the share of the bill it covers. Pictured are power lines in Drammen, south-east Norway where prices have been high. Photo by Anna Valberg on Unsplash

Following calls from other parties and pressure groups, the government will increase its support package aimed at helping households feel the squeeze of record energy prices.

“We have a power system that is reliant on precipitation, reservoir levels and the energy situation in Europe. This has put us in an extreme situation lately with sky high prices. The market does not take social considerations into account, but we (the government) can do that,” Prime Minister Jonas Gahr Støre told newspaper VG.

The original package was brought in December and saw the government pick up 55 percent of the bill when the spot price, the cost of raw energy firms pay, rises above 70 øre per kilowatt hour.

The opposition and critics subsequently said that the scheme wasn’t enough. The government subsequently said it will cover 80 percent of electricity bills, subject to a vote in parliament.

The Socialist Left Party, which the country’s minority government relies on for pushing proposals through parliament, has said it would back the increased subsidy, giving the added support a majority.

READ ALSO: Five things that are becoming more expensive in Norway (and why)

The consumption cap of 5,000 kilowatt hours will remain in place. The increased support will raise the estimated cost of the package to around 8.9 billion kroner, the energy ministry said in a statement.

According to calculations by business and finance publication E24, the new support scheme will shave around a third of household energy bills, based on a consumption of 2,000-kilowatt hours at an average price of around 1.50 kroner.

The new subsidy will apply from January, meaning the deduction will appear on the bill for that month when it arrives in February.

The scheme began in December 2021 and will run until March of this year.

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MONEY

What are the best savings options in Norway?  

Having some money set aside for a rainy day is always smart. Luckily, there are plenty of options available in Norway. However, what's best overall may depend on your situation. 

What are the best savings options in Norway?  

After your rent or mortgage, taxes, bills, and other monthly expenses are covered, you should hopefully have some money left over to put into savings and plan for your future. 

Whether you’re thinking of a rainy day fund, a nest egg, or money to put towards a home, Norway has plenty of options. 

What’s best overall will depend on your own needs. For example, if you want flexibility, you’ll want an account that allows you to make deposits and withdrawals whenever you wish. However, if you want a good rate, you’ll likely need to pen the ink on an account restricting withdrawals. 

For the best returns, look further ahead with a savings account that invests in stocks. These accounts deliver the best returns after around ten years. 

If it’s a house you’re after, you may want a BSU account. 

READ MORE: The key things you need to know about savings accounts in Norway 

The best rates come with strings attached

In terms of the best interest rates, BSU accounts typically offer the best returns. The Boligsparing for Ungdom (BSU) accounts have interest rates of around 6-6.5 percent at the time of writing. 

However, these accounts come with a catch. First, there are limits on how much you can invest per year, second, there are age restrictions, and third, the accounts can only be used for housing-related spending. 

Flexibility 

When it comes to savings accounts with more flexibility, there are several options. 

Buffer accounts (bufferkonto) are savings accounts that allow you to save up for unforeseen circumstances, such as an unexpected bill. Typically, these accounts aren’t expected to be the main savings pool. 

You can normally open these accounts without being an existing bank member, meaning you can shop around for the best rate. As these accounts are supposed to act as a buffer, you can make deposits and withdrawals as frequently as you need. 

These accounts will typically have rates comparable to savings accounts that don’t require a minimum monthly deposit and allow flexible withdrawal. 

At the time of writing, these accounts pay between 3.7 and 4.7 percent annual interest. 

For the medium term 

Some savings accounts offer slightly higher interest, but they may restrict or charge deposit fees. 

Other restrictions, such as being a bank customer, having a mortgage with it, or being a union member, may also apply. 

In a recent survey on banking among readers, a number said that union membership offered them competitive rates with savings accounts. Meanwhile, OBOS, Norway’s biggest housing association, also offers a high-interest savings account. 

Fixed-interest accounts may also offer an attractive option in the medium term. While interest rates in Norway are currently high, they are expected to fall in the coming years, so you may wish to consider a fixed interest rate account. 

Banks typically offer fixed interest for 1-3 years. The longer the rate is locked, the lower the overall rate. Therefore, it may be worth calculating whether you can expect to be better off overall by signing up for a fixed rate rather than going with the flow. 

These accounts typically offer rates a percentage point below flexible accounts.  

Longer term 

Those with an eye on the future could put even more money into their pension accounts. Typically, you will already be paying towards a state pension and workplace pension scheme in Norway. 

However, you can also invest in an IPA, individual pension account. The Sparebank group typically offers the best rates on these. At the time of writing, anywhere between 3 and 4 percent is considered a good rate. 

If you intend to save for longer than three years but don’t want to wait until retirement, consider putting some of your savings into a fund. In the longer term, these typically offer better returns than a bank. 

An index fund (indeksfond) is considered the easiest and cheapest to invest in. The cheaper the fund, the less it will affect returns. 

Mutual funds (aksjefond) are more actively managed but have higher costs. 

Then you will need to consider the scope of the fund. A more global fund will, generally, have lower risk.

Such funds are risky. Stock markets rise and fall, and over ten years, there is no guarantee that they will outperform a savings account. 

Some banks like DNB offer a combination of traditional savings and investment into funds. They offer accounts where anywhere from 30 to 100 percent of the money will be invested in shares while the rest will sit in a savings account. 

Such accounts also allow savers to choose the level of risk they are comfortable with.

If you are saving large amounts, then you may be subject to a tweak to the exit tax rules should you relocate from Norway. 

READ MORE: What we know so far about Norway’s plans for an exit tax

Where to check for the best rates 

When looking solely at savings accounts and not funds, then Finansportalen from the Norwegian Consumer Council will be an essential tool. 

It allows you to input the type of account you’re after, the money you expect to deposit and your age. From there, it will list the most important T&Cs of the accounts and order them from the best rate to the worst. 

You can also filter out banks that require you to already be a customer or take on other products. 

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