Contractual pension in the private sector (AFP) - reform alternatives

The current private sector early retirement program (AFP) exhibits shortcomings in its eligibility criteria for benefit take-up. Specifically, workers who end their careers outside a membership firm in the private sector or whose late-life career has gaps may disqualify from AFP benefits despite being a long-term member through the earlier career.

Consequently, reforming the current AFP program in the private sector has been on the agenda for some time. The primary objective is to shift from a qualifying criterion based on the final years of the career to a mapping based on all member years. On the one hand, this would ensure that every member can claim a benefit, despite being a non-member by the end of the career. On the other hand, this expansion of the program would necessarily increase the costs for both the member firms and the government. In 2021, the Labor Organization (LO) and the Confederation of Norwegian Enterprises (NHO) collaborated to publish a report titled «Utredning av en mulig reformert AFP-ordning i privat sektor (in English: Investigation of a possible reformed AFP scheme in the private sector)» (LO/NHO 2021). The report utilized the MOSART model operated by Statistics Norway. In the present report, commissioned by LO, we have provided additional analyses on the same subject.