NORWAY – The Norwegian finance ministry has proposed the legislation for a new Government Pension Fund on the lines of the existing Petroleum Fund.

It has submitted a separate legislative proposition on the proposed scheme to the national parliament, the Storting.

It said: “This fund is based on the Government Petroleum Fund and the National Insurance Scheme Fund and will help to make clear that the government accumulates assets to finance future pension payments.”

But it added that the new fund would not represent a “formal funding” of pension liabilities. And it would not have separate administrative board or administration.

“The Norwegian National Insurance Scheme will still be a pay-as-go system and integrated in the central government budget,” the ministry said.

“The need for sustainable government finances, and a pension system that is sustainable over time, requires government to continue the accumulation of considerable assets also in coming years,” said finance minister Per-Kristian Foss.

“In the proposition I have emphasized that the accumulation of financial assets that today takes place in the Petroleum Fund and the National Insurance Scheme Fund shall not be impaired,” Foss added.

The government said that it “intends that accumulation of assets in the Pension Fund shall remain of a general nature, with the size of the Fund and future allocations not being directly related to government pension obligations under the National Insurance Scheme”.

The Ministry of Finance will give a more detailed discussion of the capital of the fund once it is established.

And it said that excess spending compared to the expected real return of the Petroleum Fund would be less in 2006 – an estimated NOK12bn (€1.5bn), from 2005’s NOK22bn.

The ministry said the Petroleum Fund is expected to grow to NOK1.335trn by the end of this year. It would grow to NOK1.67trn by the end of 2006.