In 2019, the Norwegian Parliament (Stortinget) adopted legislative changes which entail that employees who are members of a defined contribution pension will have their pension savings gathered in one place, in a so-called own pension account. Approximately 1.5 million employees in private sector will be affected by the new rules. The Government decided 6 November this year that the new rules on own pension accounts will enter into force on 1 January 2021
– Finance Norway has worked continuously together with our members to facilitate that the new system with own pension account will be introduced in a good and safe way and so that employees can feel safe that their pension is well taken care of, says Stefi Kierulf Prytz, director of life insurance and pension in Finance Norway.
– We are now in the process of completing a comprehensive infrastructure that will facilitate that the process of gathering pension savings takes place efficiently and safely, she says.
What is an own pension account?
All employees in the private sector that has a defined contribution pension scheme will have their own pension account. This is the most common pension scheme in the private sector and approximately 1.5 million employees have a defined contribution pension. With own pension account, these employees will have pension capital certificates from previous employments automatically gathered in their account in the defined contribution pension scheme.
The purpose of gathering previously saved pension capital in own pension accounts is to provide a better overview of pension savings and to save costs for management and administration. This will give more pension for every krone saved.
By having pension gathered in their own pension account, employees will have their administration costs covered by the employer. They will also benefit from the same fund management fees that the employer has negotiated.
Both pensions earned by the current employer and previous pension savings are collected in the own pension account. Employees that have several employers, will have their pension savings gathered in the pension account with the largest balance.
Employees will be given more choices
Employees are given the opportunity to move their pension account to a pension provider other than the one used by the employer. Employees who do not want their previous pension savings to be gathered in their own pension account are also given the choice to reserve themselves against the transfer. Reservations must be made before 1 May 2021 for pension capital certificates that are already issued. For pension capital certificates that are issued after 1 February next year, reservations must be made within three months. Employees that decides to gather their pension capital in the own pension account before the three-month deadline has expired, may accelerate the pooling process. The choices referred to above can be made after 1 February 2021. Employees who do not make any of these choices will have their pension capital certificates automatically transferred to the own pension account after 1 May 2021.
Employees will receive more information
During the autumn of 2020, all employees that are members of a defined contribution pension scheme will receive an information letter from Finance Norway about own pension account. In addition, further information will be given by their employer or from the employer's pension provider.
In February 2021, employees will receive a letter from the employer's pension provider entailing information about the pension capital certificates that will be automatically transferred to their own pension account. They will also receive information about the options they have.
Finance Norway is in the process of developing a reservation solution in Norsk Pensjon where the employees can reserve themselves from the gathering, accelerate the gathering process and where they also will have an overview of prices.
More employees will retain earned pension
Simultaneously with the introduction of own pension account, the current requirement that employments must have lasted 12 months for the employees to be entitled to receive a pension capital certificate is abolished. Employees who resign from their jobs after 1 January 2021 will therefore receive a pension capital certificate, regardless of the length of the employment relationship. More employees with short working conditions and frequent job changes will thus retain earned pension.