Combination of old-age pensions and work

This report shows how different choices regarding the combination of old-age pension and work in 2012 affected income and wealth in the following years until 2018. Using data from income and wealth statistics, we select persons born in 1949 and separate them into groups by their labour market and pension status. The focus is on those who combined work and old-age pension in 2012 and those in work without receiving old-age pension. 

Almost one out of five persons aged 63 in 2012 combined work and pension. Among these, men were in majority. One out of three were in work without receiving pension. In both groups, the work activity fell steadily in the following years. At the same time, the number of recipients of old-age pension increased among those who did not receive this benefit in 2012. In 2015, 29 per cent of these received pension.

The level of income was higher among those combining work and old-age pension in 2012, also compared to those in work without receiving pension. This difference persists up to the age of 67, when most persons retracted from work and pensions become the main income for most. Then, differences in income are equalized. In both groups, the labour market income is quite equal throughout the whole period, and the difference in income is mainly caused by pensions. At the end of the period, the highest level of income is found among men who in 2012 were in work without receiving pension.

Differences and development of household incomes mainly follow the pattern of personal incomes. But still, differences are a bit smaller between groups when looking at income adjusted for household composition. 

Choosing to receive or not to receive pension in combination with work in 2012, does not appear to have resulted in major wealth inequalities although those combining had higher levels of income during our period of analysis. Both financial and real wealth increased in both groups. The gross wealth was higher for those combining work and pension in 2012, but they also had higher debts. In sum, net wealth was therefore almost equal for these two groups throughout the whole period. 

By using data on the estimated value of earned pension rights in 2017, we have looked at the pension wealth for those born in 1949. Those who started receiving pensions in 2012 had an average pension wealth of 5,1 million NOK. The average for those in work without receiving pension in 2012, the average value was 6,1 million NOK. The fact that the first group to a larger extent withdrew some of their pension wealth also before 2017, may have contributed to this difference.