Content
Published:
This is an archived release.
Increase in earned premiums
In the period 2004-2008, the earned premiums for pension schemes increased by 63 per cent. Much of the growth came as a result of a new mandatory occupational pension for all employees. In 2008 the earned premiums for pension schemes in Non-general government was NOK 37.6 billion, where NOK 8.7 billion came from defined contribution scheme.
There have been changes in the pension-law framework in Norway over the last years. As a part of it a new legislation from 2006 regulated a mandatory occupational pension for all employees. The new legislation means that many more employees have the right to occupational retirement pension than before.
Earned premiums increased by 63 per cent
Earned premiums include premiums from life insurance companies, pension funds and 65 per cent of total earned premiums from the Norwegian Public Service Pension Fund 1 .
In the period 2004-2008 earned premiums increased by 63 per cent, from NOK 49.9 billion in 2004 to NOK 81.5 billion in 2008. The main increase in earned premiums came in the period from 2006 to 2008. Non-general government (NGG) pension funds had an increase in earned premiums in the same period of NOK 14.3 billion, an increase of 61 per cent.
General government (GG) had an increase in earned premium of NOK 17.3 billion or 65 per cent. In the life insurance companies that manage pension for GG, the earned premiums doubled from NOK 15.5 billion in 2004 to NOK 30.2 billion in 2008.
Pension payments increased most in general government
The payment for gross pension includes retirement pension, disability pension and survivor pension.
The gross pension payment has increased by NOK 14.2 billion in the period 2004 to 2008 to NOK 43.6 billion. The payment for gross pension in GG increased 55 per cent, while the payment for gross pension for NGG increased 36 percent. Life insurance companies have 50 percent of total pension payments, while the Norwegian Public Service Pension Fund covers 40 per cent of total pension payments.
General government and non-general government has the same increase in pension entitlements
Pension entitlements are the claims the insurance companies or pension funds have put aside to cover future liabilities.
Pension entitlements have increased by NOK 240.9 billion in the period 2004-2008, from NOK 756.6 billion in 2004 to NOK 997.5 billion in 2008. The increase is the same for GG as for NGG. The Norwegian Public Service Pension Fund has estimated their pension entitlements to NOK 330 billion, and the amount has been unchanged since 2006. This is about 33 percent of total pension entitlements in 2008. Pension entitlements in defined contribution schemes amount to NOK 15.6 billion in 2008.
Individual pension
Persons over 18 years old can save individually to retirement. A system of tax-stimulated individually pension schemes were established in 1997 (Norwegian acronym IPA). From May 2006, the Norwegian Parliament decided to discontinue the tax incentives for new contributions to IPA contracts, and the introduction of the mandatory occupational pension scheme was one of the reasons for ending these tax incentives. The obligatory occupational pension secures almost everyone a possibility for supplementary saving in pension agreements. New legislation of tax stimulated individual pension agreements was displayed in 2008, IPS. The figures reflect the changes in the tax system concerning the individual pension. The earned premium decreased by 68 per cent in the period 2004-2008. The payments were highest in 2007, at about NOK 19.8 billion. The pension entitlements in individual pension agreements decreased about 31 per cent after ending the tax incentives of IPA in 2006.
| 1 | The Norwegian Public Service Pension Fund is financed on a pay-as you-go basis and only 65 percent of total premium is paid direct by the employers. Joint premiums for employees in the budgetary central government are transferred to the Norwegian Public Service Pension Fund. |
For more information, contact:
Gudrun.Haraldsdottir@ssb.no , tel +47 21 09 46 48, Dag.Gausdal@ssb.no , tel. +47 21 09 46 99, Heidi.Vegsund@ssb.no , tel. +47 21 09 44 50, or Ola.Tveita@ssb.no , tel. +47 21 09 45 18.
Tables:
Defined benefit schemesOpen and readClose
Pension secures income for people when they retire from work, become disabled or if they are surviving spouse. The National Insurance Scheme in Norway secure pension for all people living in Norway for the last 12 months. Through work people will build up supplementary pension. Employees in public sector have been covered by occupational pension for several years. A new legislation from 2006 regulated a mandatory occupational pension for the employees also in private sector. Occupational pension are either defined benefit schemes, where the pension for the employee is fixed, or defined contribution schemes, where the payment to the fund is a fixed percentage of the income. In private sector you can have both, but in public sector there are only defined benefit schemes. Defined benefit schemes can be establish in life insurance companies or in pension funds, while defined contribution schemes also can be established in banks and mutual funds management companies. The statistics published in this article consist of information from the life insurance companies, pension funds, Norwegian Public Service Pension Fund and banks and includes retirement, disability and survivor pension.
In addition to National insurance scheme and occupational pension, each person can save individually to the retirement by buying an Individual Pension Agreement (IPA) until 2006, and Individual Pension Saving (IPS) from 2008.
Types of pensionOpen and readClose
Defined benefit schemes
A defined benefit scheme is a pension scheme where the benefits payable to the employee on retirement are determined by the use of a formula, either alone or in combination with a guaranteed minimum amount payable. The risk of a defined benefit scheme to provide an adequate income in retirement is borne by the employer (source: Eurostat). In Norway, the payment guaranties a pension on a certain level in addition to National insurance, or that the payment is a fixed percentage level of their salary. You can have defined benefit schemes in life insurance companies or in pension funds.
Defined contribution schemes
A defined contribution scheme is a pension scheme where the benefits are defined exclusively in terms of the level of the fund built up from the contribution made over the employee's working life. The increases in value of these funds depend of the yield on the investment and the saving period. The entire risk of the scheme to provide an adequate income in retirement is thus borne by the employee (source: Eurostat). In 2001, companies were allowed to establish defined contribution schemes with tax deduction. Defined contribution schemes can be established in life insurance companies, pension funds, banks and mutual funds management companies.
Individual pension
The legislation of individual pension agreements gives all persons over 18 years right to sign such an agreement independently of work affiliation. Individual pension agreements may be made in a form of defined contribution or pension insurance agreements and can be establish in life insurance companies, pension funds, banks and mutual funds management companies.
Retirement pension
Benefit to people that is retired, usually by 67 years old or older, or that have retired by joint pension under collective agreement, usually 62 years old.
Disability pension
If the salary is reduced because of illness or handicapped injury, disability pension may be relevant
Survivor pension
When a person dies, surviving spouse can be entitled to survivor pension.
Norwegian Public Service Pension Fund
The Norwegian Public Service Pension Fund is the main pension fund in public sector. It is regulated by law of 28. July 1949 about Statens Pensjonskasse. It is an unfunded pension fund, and it is a part of the general government. The Norwegian Public Service Pension Fund is financed on a pay-as you-go basis and only 65 per cent of total premium is paid direct by the employers.
The Statistics comes from Statistics Norway annual reports from life insurance companies, pension funds and banks, while the numbers from Norwegian Public Service Pension Fund comes from their annual accounts 2004 - 2008.
Contact
-
Dag Waage Gausdal
E-mail: dag.gausdal@ssb.no
tel.: (+47) 40 90 26 82
-
Ola Tveita
E-mail: ola.tveita@ssb.no
tel.: (+47) 99 73 45 83