The Norwegian government and labour-market organisations have agreed new terms for the country’s public sector pension scheme, which covers central government and municipal staff.

Norway’s Ministry of Labour and Social Affairs said the agreement would make it worthwhile for scheme members to work for longer, and ensure that people who had to end their careers early would be taken care of.

Anniken Hauglie, Minister of Labour and Social Affairs, said: “We have established a sustainable pension solution for the public sector that will stand over time.

“The new scheme is good for the employees, the employers and the community.”

The new scheme would also make it easier for people to switch jobs between the public and private sectors and ensure that all public employees received occupational pensions, the ministry said.

Discussions about a new solution for public sector pensions have been going on in Norway since around 2009.

The main problem with the old scheme was that changes made in 2009 to account for rising longevity left members born in 1959 or later with much lower pensions than the previous cohort.

The new deal was agreed on 3 March between the Ministry of Labour and Social Affairs and labour and employer organisations LO, Unio, YS, the Federation of Norwegian Professional Associations, the Norwegian Association of Local and Regional Authorities (KS) and Spekter.

Hauglie said that even though there had been disagreements along the way, the deal was the result of a good tripartite cooperation.

Gunn Marit Helgesen, chairman of KS, said her organisation was pleased with the deal, which she said ensured good pension schemes for the employees of municipalities.

“Younger workers are now assured of a good pension scheme and greater flexibility,” she said. “This is what we have been working for at KS for many years.”

Finn Melbø, chief executive of the Norwegian Public Service Pension Fund, the country’s main provider of public occupational pensions, said the deal was key to the completion of pension reform.

However, he added that the reform would take a long time to apply fully, with many scheme members continuing to be subject to today’s rules and transitional rules for many decades to come.

“A reform of this kind can not happen overnight,” Melbø said.

The public retirement pension had been virtually unchanged since the Government Pension Fund was established in 1917, but in the meantime the workforce had changed a lot, he said.

“We are also living longer, so the pension system has to be adapted, and younger people have to work longer to get the same pension level as older cohorts,” Melbø said.

Meanwhile, KLP, Norway’s largest municipal pensions provider, also welcomed the agreement between the social partners.

Marianne Sevaldsen, executive vice president of KLP’s life division, said: “Now let’s figure out what consequences these changes have for all our customers and members.”

The proposal for the new public service pension must now be approved by each organisation before being voted on by the Norwegian parliament.