National insurance retirement pensions
// Retirement pension Do you know the rules for retirement pensions? New rules for retirement pensions from the National Insurance Scheme were introduced on 1 January 2011. What do these rules mean for you? What are your options? This brochure from NAV explains those options. The choice is yours. 2
What do the retirement pension rules mean for you? The rules that apply to you depend on factors such as when you were born. The following pages explain more about: How retirement pensions are earned How retirement pensions can be drawn How retirement pensions are adjusted Did you know? You can start drawing your retirement pension from the age of 62, if you have accumulated enough pension rights. The longer you wait to start drawing your retirement pension, the more you will receive each year. Your retirement pension will be adjusted in line with average life expectancy in Norway. You can work as much as you want without your pension being reduced. 3
// Retirement pension How do you earn a retirement pension? The pension rights rules that apply to you depend on factors such as when you were born. Were you were born in or after 1963? You will earn your retirement pension according to the new entitlement rules. For each year you accumulate pension rights, you build up a pension fund that will determine the size of your retirement pension. Were you born between 1954 and 1962? You will earn your retirement pension according to a combination of the old and new accumulation rules. For example, if you were born in 1954, 90 per cent of your pension will be calculated according to the old rules and 10 per cent according to the new rules. If you were born in 1962, 10 per cent of your pension will be calculated according to the old rules and 90 per cent according to the new rules. Were you born between 1943 and 1953? You will continue to earn your retirement pension according to the old accumulation rules. In the new system, you can keep on earning pension rights until the age of 75. Follow your pension online NAV s online pension service Din pensjon at nav.no shows you your pensionable income and how much pension you have accumulated. 4
Earning a retirement pension according to the old rules: Your 20 best income years determine the size of your pension. It takes 40 years to earn a full retirement pension. How much pension you have earned is expressed in terms of pension points. If you were born in or after 1943, you earn pension rights on all pensionable income until you reach the age of 75. Unemployment benefit and certain other national insurance benefits also count as pensionable income. You earn pension rights for unpaid care work equivalent to an income of 4.5 x G (4 x G prior to 2010). Earning a retirement pension according to the new rules: All the years you are in work or receive other pensionable income until you reach the age of 75 count towards your pension. Some national insurance benefits also count as pensionable income. The pension you have accumulated so far is expressed in terms of savings in a pension fund that is adjusted each year. Your pension fund increases each year by 18.1 per cent of: - Your pensionable income up to 7.1 x G. - Income corresponding to 4.5 G for unpaid care work (4 x G prior to 2010). - Income corresponding to 2.5 x G for time spent doing compulsory military or civil service lasting at least six months. - Previous income up to 7.1 x G in the event of unemployment with unemployment benefit. G is the national insurance basic amount and is NOK 85,245 as of 1 May 2013. Minimum pension for people who have had no earned income Everyone who has lived in Norway for at least 40 years after the age of 16 is entitled to a retirement pension corresponding to a minimum pension from the age of 67. 5
// Retirement pension How can you draw your retirement pension? It is up to you to decide when and how you want to start drawing your retirement pension and how much you want to work at the same time. Drawing a retirement pension: You can start drawing your retirement pension from the age of 62, if you have earned enough pension rights. You can work as much as you want without your pension being reduced. You can draw your full pension, or only a part of it: 20, 40, 50, 60 or 80 per cent. This is called your pension level. Once you have started drawing your pension, you can change your pension level once a year. However, you are free to decide to draw your full retirement pension or stop drawing your pension whenever you want. Calculate your pension Not everyone has earned enough pension rights to be able to start drawing their retirement pension at the age of 62. At the online pension service Din pensjon at nav.no you can make calculations in order to see when you can draw your pension and what pension level you will be entitled to. 6
You can combine work and drawing a pension however you want The rules for drawing a retirement pension mean that you can work as much as you want, even if you are receiving a pension. You can choose the combination of work and pension that suits you best. For example, you might want to work in an 80 per cent position and draw 40 per cent of your full retirement pension. The possibilities are almost endless. work How much do you want to work? pension How much pension do you want to draw? Do not want to work Work parttime Work fulltime Wait Partial pension Full pension If you decide to start drawing your pension, you must apply for the pension level you want and the date you want to start receiving your pension (see also page 14). How much of your retirement pension you choose to draw and when you choose to start drawing it will affect how much you will receive later on. If you want to change how much you work, you must talk to your employer. If you continue to work after you start drawing your pension, you will continue to earn new pension rights. 7
// Retirement pension Your retirement pension will be adjusted in line with life expectancy Your pension will be adjusted in line with average life expectancy in Norway. This means that if average life expectancy rises, younger people will have to work a little longer than older people to receive the same pension. Life expectancy adjustment has been introduced to make sure that the pension system remains sustainable. You can compensate for adjustments for life expectancy by waiting before you start drawing your pension. The figures below show how long after the age of 67 people born in different years would have to postpone drawing their pension in order to compensate for adjusted life expectancy. 1946: 3 months, 1948: 5 months, 1950: 8 months, 1952: 10 months, 1962: 2 years and 2 months. These figures are for a person who has 40 years accumulation of pension rights when they reach 67. If you put off drawing your retirement pension, you will receive more per year! Drawing your retirement pension - an example utbetalinger Kjell was born in 1951 and has lived and worked in Norway all his life. During 40 years of work he has had an annual income of NOK 420,000. The longer Kjell waits to start drawing his retirement pension, the more he will receive per year. 8
If Kjell Kjell er født decides i 1951 og to har draw bodd og a jobbet full i Norge retirement hele sitt liv. pension I løpet av from the age of 63, he 40 will år i arbeid receive har han approx. hatt en årlig NOK inntekt på 183,000 420 kroner. a year. Kjell får større årlige utbetalinger jo lenger han venter med å ta ut alderspensjonen. If Kjell decides to postpone drawing his full retirement pension until * Hvis Kjell velger å ta ut hel alderspensjon fra han er 63 år, vil hans årlige he is 67, his annual pension will increase to approx. NOK 224,000. utbetaling bli 183 000 kroner. If * Kjell Hvis Kjell waits venter med until å ta he ut hel is alderspensjon 70 before til starting han er 67 år, to øker draw his full retirement pensjonen hans til 224 000 kroner. pension, * Hvis Kjell the venter amount helt til han er he 70 receives år med å ta ut will hel alderspensjon, increase to approx. NOK øker utbetalingen 266,000 til a 266 year. 000 kroner i året. 275 000 250 000 225 000 200 000 175 000 150 000 125 000 100 000 75 000 50 000 25 000 0 60 61 62 63 64 65 66 67 68 69 70 71 72 The figures show how much Kjell will receive if he chooses to draw a full pension. However, if he decides to draw a smaller percentage of his retirement pension, the figures will change, as Kjell is then saving more of his pension for later. Try out the online pension service Din pensjon Use the online pension service Din pensjon at nav.no to calculate your pension, and see how different start dates and pension levels will affect how much you receive. 9
// Retirement pension How is your retirement pension adjusted annually? The cost of living and salaries generally go up each year. In order to preserve the value of your earned pension rights, your retirement pension will be adjusted each year on 1 May. Adjustment of retirement pension during accumulation Retirement pension savings that you have not yet received are adjusted in line with average wage growth in Norway. Adjustment of retirement pensions during payment Retirement pensions that are being drawn are adjusted every year in line with average wage growth, and then reduced by 0.75 per cent. Over time this is expected to result in adjustments that match average wage and price increases. Example: Assume that your retirement pension prior to adjustment is NOK 250,000 and wage growth is 3 per cent. After adjustment your retirement pension will be NOK 255,569. This is calculated by: adding wage growth: NOK 250,000 x 1.03 = NOK 257,500 subtracting 0.75 per cent: NOK 257,500 x (1-0.0075) = 255,569 kroner 10
Other frequently asked questions Can I receive both disability pension (uførepensjon) and retirement pension (alderspensjon) at the same time? Yes, you can receive both a disability pension (uførepensjon) and a retirement pension (alderspensjon) at the same time, but the combined pension levels of the two pension types must not exceed 100 per cent. Will living or working abroad affect my retirement pension? Living abroad for long periods of time may affect your pension. If you have lived or worked in another country, you should find out whether you have earned entitlement to a pension from that country. NAV can help you with this and will also help you apply for a pension from countries that Norway has a social security agreement with. Do I have to pay tax on my retirement pension? Your retirement pension is taxable. If you are drawing a retirement pension and are still in work, you will also continue to pay your usual tax on your earnings. You can find more information about tax and pensions on the Norwegian Tax Administration s website: skatteetaten.no. NAV can advise you on retirement pension rules If you have any questions about national insurance retirement pensions, you can call NAV s pensions helpline on: (+47) 55 55 33 34. They can also answer questions about combining a retirement pension with a disability pension, or your rights as a surviving spouse. Information about other benefits such as supplementary benefit, sickness benefit or work assessment allowance (AAP) from NAV is available on our website: nav.no. 11
// Retirement pension Your total retirement pension more than national insurance? In addition to entitlement to a retirement pension from the National Insurance Scheme, many people have also accumulated pension rights through their work. Some people also have a private pension fund where they have saved money. Your total pension may therefore consist of: National insurance retirement pensions The amount you receive as your national insurance retirement pension depends on what you have earned during your life and how many years you have lived in Norway. Occupational pensions and contractual early retirement pension (AFP) Most employees have some kind of occupational pension scheme. Your employer or the provider of your occupational pension plan can provide you with information on the pension scheme you are a member of. The AFP scheme is a pension scheme for employees who have reached the age of 62 and work in an area that has a collective agreement concerning contractual early retirement. Ask your employer if you are uncertain about whether you are entitled to a contractual early retirement pension or if you have any questions about the scheme. Your own savings Payments from any private pension plans you have will be in addition to the other payments you will receive when you start drawing your pension. 12
People entitled to a contractual early retirement pension (AFP) There are different rules for private and public sector contractual early retirement pension (AFP) schemes. A private sector contractual early retirement pension is a lifelong supplement to a national insurance retirement pension. If you want to start drawing your private sector contractual early retirement pension, you must also apply for a national insurance retirement pension at the same time. You can continue to work as much as you want without your pension being reduced. In the public sector a contractual early retirement pension is an early retirement pension you can receive between the ages of 62 and 67. If you decide to start drawing your public sector contractual early retirement pension, you cannot receive a national insurance retirement pension at the same time. There are restrictions on how much you can earn without your pension being reduced if you start drawing your public sector contractual early retirement pension. Information about pensions from organisations other than the National Insurance Scheme: The Norsk Pensjon (Norwegian pensions) portal (norskpensjon.no) provides information about private occupational pensions and other private pension contracts. The Norwegian Public Service Pension Fund s website (spk.no) provides information about public service pensions and contractual early retirement pensions for public sector employees. 13
// Retirement pension The website afp.no is run by the joint office for the Norwegian Confederation of Trade Unions (LO) and the Confederation of Norwegian Enterprise (NHO) pension schemes and provides information about the new contractual early retirement pension (AFP) scheme in the private sector. You can ask your employer for more information about your occupational pension scheme. Your employer can also tell you whether or not you belong to a contractual early retirement pension scheme. Pensions are easy online - try out the online pension service Din pensjon at nav.no Go to nav.no, then log into the online pension service Din pensjon. This service has access to your pension details and allows you to calculate your pension in a variety of different configurations. On the online pension service Din pensjon you can: See your earned pension rights in the National Insurance Scheme. Calculate your future national insurance retirement pension and any contractual early retirement pension (AFP) and occupational pension you are entitled to. Apply for a retirement pension from the National Insurance Scheme and later apply to change your pension level. Apply for a private-sector contractual early retirement pension under the AFP scheme. See how much pension you have received. Contact NAV if you have any queries about retirement pensions. 14
Log in requirements: You log into the online pension service Din pensjon via ID-porten/ MinID. ID-porten is a joint log in solution for online access to public agencies and provides access to all of NAV s self-service services. You can log in using: A BankID A MinID password and single-use code A smart card from Buypass A USB stick from Commfides You can find information about how to get your electronic ID on difi.no. Log in with a temporary password: Alternatively, if you do not use MinID, you can log in using a temporary password. You can get these by calling NAV s pensions helpline on (+47) 55 55 33 34 or by visiting your local NAV office. For security reasons, if you get your temporary password by phone, you will not have access to all the functions in Din pensjon, including the ability to apply for a retirement pension. 15
// Retirement pension Application information If you decide to start drawing your retirement pension and you know when you want payments to start, remember that: You have to apply for your national insurance retirement pension. You can apply online or print out a partially completed application form from the online pension service Din pensjon at nav.no. You may get an answer within a few minutes if you submit your application electronically. Your NAV office can provide you with a partially completed application form and information about the application process for a national insurance retirement pension. If you want to draw a private sector contractual early retirement pension (AFP) at the same time as your retirement pension, you must remember to send a separate application for this if you submit a paper application. When do you have to apply? The earliest we can start paying your national insurance retirement pension is the month after we receive your application. It is therefore important that you apply well before the month in which you want to start receiving your pension. The normal processing time for retirement pension applications is three months. However, if you submit your application electronically from the online pension service Din pensjon, you may get an answer within a few minutes. 16
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// Retirement pension You can find out more about the national insurance retirement pension from: - nav.no - The online pensions service Din pensjon on nav.no - Helpline phone (+47) 55 55 33 34 We will show you the possibilities. The choices are yours. Published by: The Norwegian Labour and Welfare Service P. O. Box 5 St. Olavs plass NO-0130 OSLO 20 Revidert desember 2013 Engelsk august 2012 Opplag 5 000 Trykkeri: 07 GRUPPEN AS Layout: Seksjon for informasjon og kanalvalg, arbeids- og velferdsdirektoratet ISBN 978-82-551-2302-6