Norway unveils new occupational pensions to replace existing plans
EUROPE - Norway has outlined two new types of occupational pension product to replace existing plans, as it adapts workplace pensions to the new state pension system and conditions in the financial and labour markets.
The Banking Law Commission (Banklovkommisjonen) presented its report to the Norwegian finance ministry, containing a draft new act on collective occupational pension insurance.
It sets out two different models for occupational pensions for employers to choose between.
Finance minister Sigbjørn Johnsen said: "My aim is that parliament should be able to adopt a comprehensive plan for the new pension product, which includes rules on the transition from existing to new products, by the summer of 2013."
The ministry said the new bill from the commission contains two options for controlling cost and risk-sharing in individual pension plans between the pension scheme, companies and workers.
They also allow for a high degree of flexibility in the design of the individual pension plan, it said.
There will be a standard model and a basic model of pension.
The standard model will allow companies to set employees' pensions at the same level, and have similarities to current defined benefit pension schemes.
The basic model is designed for businesses that need annual payments into the scheme to be predictable, without requiring supplements and with liabilities having minimal impact on balance sheets.
The ministry tasked the commission in July 2009 with putting forward changes to the state and private pension system.
Its previous report led to the reform of the national insurance scheme, which came into effect in January 2011.
The reform introduced more flexibility on retirement age and the percentage of pension that could be drawn and allowed for partial retirement. It also linked the pension to life expectancy.
Following a three-month consultation period, the ministry said it intended to submit a bill during the winter of 2012-13.
Storebrand, the Nordic pensions, insurance and banking group, was positive about the new pension product plans.
It said they were well adapted to the public pension system reform, as well as new capital requirements under Solvency II.
It said: "The products' tax treatment allows for good pension schemes for employees. The proposal gives increased flexibility and more predictable costs for employers compared with today's defined benefit pension schemes."
The capital requirements resulting from the new models would be manageable in risk terms, it said.
"The products' zero guarantee reduces the investment risk, and the longevity risk is significantly reduced as a result of the life expectancy adjustment," it added.