The Norwegian government has opened a public consultation on the long-held plan to broaden mandatory occupational pension coverage by removing the lower earnings threshold at which employers make contributions, but worker and employer representations are in sharp disagreement over the terms.
The Ministry of Finance published the report it received from the working group convened to come up with a plan on savings “from the first krone” in defined contribution mandatory occupational pension (obligatorisk tjenestepensjon, OTP) schemes.
The group, which included employer and employee representatives, also looked at whether employees under 20 and part-timers on less than 20% time should be entitled to membership in all types of occupational pension schemes.
Jan Tore Sanner, finance minister, said: “Pension from the first krone and the first day are important issues for many employees and for the parties in working life.
“It is good that we have now studied various alternatives for the potential accrual of a pension from the first krone, and mapped the costs for the various elements,” he said.
There was now a good factual basis to work on, Sanner said.
The “pension from the first krone” (pensjon fra første krone) plan is in a similar vein to the “pension from the first day” reform already on track to be introduced in 2021 in Norway, with the latter giving employees the right to pension earnings even if they have been employed for less than a year.
The ministry said that since there had been different views in the working group on the issues addressed, the group had made no joint recommendation, but studied the consequences of various possible changes.
For savings from the first krone, the ministry said the group had looked into a cost-neutral alternative to the current minimum requirement for contributions under the Mandatory Occupational Pensions Act, which is 2% of salary between 1 and 12 G.
Here ‘G’ refers to the national insurance basic amount (folketrygdens grunnbeløp) of an individual’s salary. This is set each year, and from 1 May 2020, the basic amount was NOK101,351.
“According to the working group, an approximate cost-neutral alternative will be a minimum contribution of 1.6% of all salaries up to 12 G,” the ministry said.
It said the group also considered the consequences of a savings rate of 2%, and had described solutions that were between 1.6% and 2%.
As well as this, the group looked at the consequences of reducing or removing the current minimum requirements for age and part-time work, or replacing these limits with a minimum salary requirement, according to the ministry, which said draft legislation and regulatory amendments had been drawn up for these various alternatives.
The report is now being sent out for consultation, it said, with a deadline of 19 March 2021.
Nina Melsom, director of working life at NHO, the Confederation of Norwegian Enterprise, responded to the publication of the report saying an increase in the minimum requirements for occupational pensions would be challenging, especially for companies where wages represented a large proportion of total costs.
“If the rate is not cost-neutral, a possible change in the regulations will affect companies in, for example, service, trade and tourism,” she said, adding that these sectors were often the gateway to working life for many young people.
Meanwhile, Peggy Hessen Følsvik, deputy leader of LO, the Norwegian Confederation of Trade Unions, said that if the plan to reduce contributions to 1.6% was implemented, it would result in a poorer pension for many, and weaken what she said was already a minimum scheme.
“We at LO will never agree to that,” she said in a statement on the umbrella organisation’s website.