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PENSIONS

Five key things you need to know about Norway’s state pension

Norway's pension system is often lauded as one of the best in the world. The Local takes a look at the five key things you need to know about retirement pensions in the country.

Published: 12 October 2022 12:53 CEST
Updated: 3 November 2022 15:03 CET
Female pensioner
Pictured is a pensioner. Photo by Artem Labunsky / Unsplash

There are three different pension schemes in Norway: the retirement pension from the National Insurance Scheme, occupational pension or early retirement pension from employers, and private pension.

As pension systems can be complicated to understand, we will go through the key aspects of the state pension, that is, the retirement pension from the National Insurance Scheme, for people born in and after 1963.

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

Before we get into it, there are several concepts related to the pension system that need to be clarified – National Insurance Scheme membership and the minimum pension level:

  • National Insurance Scheme membership: If you live in Norway, as a general rule, you’re a member of the National Insurance Scheme. Membership in the scheme entails paying an insurance contribution if you have an income from work or a pension.
  • Minimum pension level: The minimum pension in Norway is the guaranteed minimum retirement pension benefit from the National Insurance Scheme.
  • The “Din pensjon” online service: The state’s “one-stop shop” for calculating your retirement pension, checking the earliest date at which you can start drawing your retirement pension, and applying for a pension.

What are the preconditions for claiming a retirement pension?

In order to be able to claim a state retirement pension, 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.

The retirement age in Norway is set at 67. While it is up to each individual to decide when and how they would like to draw their retirement pension and if they want to work while doing so, the right to start drawing retirement pension begins from the month after you turn 62.

As the Labour and Welfare Administration (NAV) points out, you must have sufficient earnings (at least equivalent to the minimum pension level) to draw a retirement pension before age 67.

What is the minimum pension level?

As of 2011, the minimum pension level replaced the basic pension scheme for old-age pensioners in Norway.

The minimum pension level is a guaranteed minimum retirement pension from the National Insurance Scheme. Note that the size of your pension is mainly based on your pensionable income.

As the NAV notes, you must draw 100 percent of your retirement pension and have “at least five years of National Insurance coverage” to be entitled to the minimum pension level.

To receive the full minimum pension level, you need to have 40 years or more of National Insurance coverage.

If you have less than 40 years of coverage, the minimum pension level will be reduced accordingly.

The amount paid at the minimum pension level depends on your marital status and several other factors, but you can use the NAV’s online tool “Din pensjon” to calculate your retirement pension.

When can I start drawing a retirement pension?

In practice, most people get to start drawing their retirement pension at 67 – due to the prerequisites set forward beforehand.

However, make sure to use the NAV’s “Din pensjon” online service to check the earliest date at which you can start drawing your retirement pension.

How much retirement pension will I receive?

Several factors impact how much retirement pension you will receive. To start off, your choices have the most notable effect on the amount.

You can draw 20, 40, 50, 60, 80, or 100 percent of your retirement pension. How much retirement pension you choose to receive and when you start receiving it will affect your monthly pension.

The longer you wait to start drawing a retirement pension, the higher the pension payment will be. You can also increase your pension by continuing to work while receiving your retirement pension.

In Norway, you are entitled to accumulate pension rights up to, and including the year you turn 75.

Make sure to use the NAV’s “Din pensjon” tool to calculate your retirement pension, find out when you can start drawing a pension, and how much pension you have already accumulated.

The tool also offers projections, so you can see, for example, what would happen if you decide only to draw some of your pension.

When and how do you apply for a retirement pension?

In Norway, you are entitled to start drawing a retirement pension from the month after your turn 62 – if you have sufficient pension earnings. However, most people apply for their retirement pension at 67.

The NAV recommends that people apply for retirement pension around three months before they want pension payment to start.

Note: The earliest date on which you will be entitled to a retirement pension will be the month after the NAV has received your application.

As with all other things pension-related, you can also use the “Din pensjon” tool to apply for the retirement pension. Using the online service is recommended as it usually leads to faster processing.

You can also apply via a paper application, which will likely take longer to process.

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For members

MONEY

EXPLAINED: How wealthy is the ‘average’ Norwegian? 

Norway is known for its high wages and stable economy. New figures have revealed the wealth of the average resident in the Nordic country. 

Published: 23 April 2024 15:50 CEST
Updated: 16 May 2024 15:36 CEST
EXPLAINED: How wealthy is the 'average' Norwegian? 

High salaries go hand in hand with the high cost of living in conversations about Norway.

However, other factors, such as high homeownership rates, indicate that there is plenty of disposable income for locals to save and invest in their futures. 

Previous studies have also suggested that Norwegians are the seventh wealthiest nationals in the world. 

Norway’s national data agency, Statistics Norway, has compiled its own set of figures indicating that the average Norwegian household has a net wealth of around 3.8 million kroner. 

Net wealth accounts for everything a person owns, including property, stocks, or cash, minus any debts or liabilities. 

The vast majority of this wealth was derived from the estimated value of property. This alone gives the average Norwegian an estimated wealth of 3.74 million kroner. 

READ ALSO: How much does an apartment in Norway cost?

The value of second homes was included, which skewed things as only around 10 percent of households owned a secondary residence. 

The average price of a home in Norway was 4.5 million kroner in March of this year, and house prices have increased substantially in recent years. 

Savings, cash, stocks and other capital accounted for 1.72 million kroner, giving Norwegians an average wealth of 5.46 million kroner. Average debts of 1.68 million kroner gave Norwegians an average net wealth of 3.8 million kroner.  

The figures from Statistics Norway were obtained using figures from tax returns for 2022, which were submitted in 2023.  

Those aged between 67 and 79 years old were the wealthiest generation in Norway on average. This is partly because they have more capital than most other groups and more expensive property. 

However, the most significant factor is the lower levels of debt. They had half the debt of the next richest group, those aged between 55 and 69. 

Younger age groups weren’t as wealthier as they had much higher debts and lower capital. 

Still, Norway’s wealthiest individuals significantly boosted the average. When using the median, the average Norwegian household had a net wealth of just under 2 million kroner. 

When the median was applied to capital, the figure was 339,300 kroner compared to the average of 1.76 million kroner. 

The large difference in capital was attributed to Norway’s wealthiest individuals significantly pulling up the average. 

“This is mainly due to large fortunes in shares and securities, where a few own very much. Shares and other securities and share savings accounts are assets with a median value equal to zero, which indicates that these are not important asset items for most households,” the report said. 

Money kept in the bank was still important for most residents of Norway, though. The median value of bank deposits in Norway was 215,000 kroner, compared to the average of 600,000. 

The gulf between the average value of property owned and the median was roughly 500,000, with the median being 3.25 million kroner. 

Furthermore, Norway’s median debt level was around 860,000 kroner compared to the average of 1.67 million kroner. Around 85 percent of Norwegian households were in some form of debt. 

Significant differences also exist between Norway’s wealthiest and poorest residents. Residents belonging to the country’s poorest ten percent had an average net wealth of almost minus 1 million kroner. 

Meanwhile, Norway’s wealthiest ten percent had a net wealth of 19 million kroner. The top 50 percent also owned considerably more than the bottom 50 percent. 

“Despite the former comprising 1.27 million households, while the latter comprises approximately 25,000 households, the bottom 50 percent own only 4 percent of the total net worth, while the top 1 percent owned as much as 22.3 percent in 2022,” the report read. 

There was also significant variation in wealth depending on household type. For example, a single mother or father with a child aged between 6 and 17 had a net wealth of 2.24 million kroner, compared to a couple with children of the same age with an average net wealth of 5.12 million kroner. 

Typically, households with more than one person had more money as more than one wage earner likely lived at the address. 

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