Explanation of Terms and Expressions About Pensions

What are pension assets?

Pension assets form the basis for calculating retirement pension from the National Insurance Scheme. Pension assets correspond to the sum of annual accumulation of pension entitlements that are built up during your lifetime based on pensionable income, compulsory military service, receipt of unemployment benefit, disability benefit and care work.

The pension entitlement for a calendar year is adjusted for wage growth and added to the pension assets at the end of the year when the tax return for that year is completed. To see what you will receive in annual pension, you must go to the pension calculator at nav.no.

How are pension assets adjusted?The pension balance is adjusted annually in line with wage growth.

HOW ARE PENSIONS ADJUSTED DURING PAYOUT?Retirement pension during payout is adjusted each spring based on the average of price and wage growth.

HOW IS ANNUAL INCOME CALCULATED?For each year you have pensionable income, 18.1 per cent of the income is added to your pension balance. You earn pension on the entire balance.

Sickness benefit, work assessment allowance and care salary are also counted as pensionable income.

You can accumulate pension entitlements up to and including the year you turn 75. If you turned 13 in 2010 or later, you can accumulate entitlements from the year you turned/turn 13. If you were 17 or older in 2010, you can accumulate entitlements from the year you turned 17.

Annual income is included from 1 January the year after the assessment is completed. This means, for example, that income for 2016 is first included in the pension from 1 January 2018.

WHAT IS CARE CREDIT?Care credit is not an additional salary paid to you by the National Insurance Scheme, but a scheme that helps you receive a higher pension when you retire. You must be a member of the National Insurance Scheme during the care period to be entitled to care credit.

The care credit scheme was introduced in 1992 and has since been extended so that persons with children born before 1992 can receive this credit.

For more information see: Your accumulation of pension entitlements at NAV.no

FLEXIBLE WITHDRAWALIntroduced on 1 January 2011, this means you have the option to start payout of retirement pension from age 62. To be able to start withdrawal of retirement pension from the National Insurance Scheme, you must meet certain conditions.

PENSION FROM EMPLOYEROccupational pension scheme is the pension you receive through your employer.

There are three types: defined-benefit pension, defined-contribution pension and hybrid pension. Public sector employees have a public occupational pension scheme.

DEFINED-BENEFIT PENSION AND HYBRID PENSIONDefined-benefit pension has historically been the most common. Employees receive a pension that is often lifelong, based on their final salary.

Hybrid pension is a combination of defined-benefit pension and defined-contribution pension. The employer saves as in a defined-contribution pension, and the payouts can be lifelong.

Paid-up policyIf you have been a member of a defined-benefit pension scheme and meet the conditions for transferring your accumulated pension entitlements, you have a paid-up policy.

Defined-contribution pensionWith a defined-contribution pension, your employer saves a percentage of your salary each year towards your pension. The money is transferred to your pension account. The contributions from your employer and the returns you receive on the money saved together make up your occupational pension. You decide how the money should be invested.

Individual pension accountIf your employer has a defined-contribution pension scheme, you have an individual pension account and you can find information in Spare and Norsk Pensjon.

If you leave the company, you will be deregistered from the defined-contribution pension scheme and your pension account will be converted into a pension capital certificate.

Contractual early retirement pension in the private sector (AFP)AFP in the private sector is paid for life and comes in addition to your retirement pension from the National Insurance Scheme and occupational pension. AFP can be paid from the age of 62 and you must draw at least 20% retirement pension from the National Insurance Scheme to start receiving AFP.

To receive AFP in the private sector, you must work for a company that is affiliated with the AFP scheme in the private sector. You must apply for AFP whilst you are still in employment to avoid losing your entitlement to AFP.