Q&A about own pension account

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Q&A about own pension account

What is an own pension account (egen pensjonskonto)?

Own pension account means that all employees in the private sector who are members of a defined contribution pension scheme will have former pension savings gathered together in your pension account in your current employer’s defined contribution pension scheme.

The pension account is managed by the pension provider chosen by your employer. You will be given the opportunity to choose another supplier if you wish.

If you have several employers, your former pension savings will be pooled in the account that has the most pension capital.

The vast majority of employees are expected to experience lower pension costs when pension agreements are collected in the own pension account. You thus avoid the administration costs that apply for each of your individual agreements. If you keep your own pension account within your employer’s defined contribution pension scheme, your administration costs will be covered by your employer. You will also benefit from the same fund management fee that your employer has negotiated.

Pension capital certificates from previous employments will be transferred automatically to the own pension account, unless you reserve yourself against the transfer.

A solution where employees can make reservations is currently being developed within Norsk Pensjon. This solution will also provide you with an overview of all relevant agreements and the prices that apply.

Pension capital certificates from previous individual savings agreements (IPS from the law of 2008, and IPA) can also be collected in the own pension account. These agreements will not be gathered automatically, and you must contact the provider of these agreements before the pooling process can be completed.

Own pension account will follow you throughout your entire career for as long as you are employed in a company with a defined contribution pension scheme.

How do I establish my own pension account?

It is not necessary to take any actions. Your own pension account will be established in your employer’s defined contribution pension scheme.  

You may choose another provider for your own pension account than the one used by your employer.

Any pension capital certificates you have from earlier employments will be transferred automatically into your own pension account unless you reserve yourself against the transfer.

If you do not want the pension capital certificates to be gathered in your own pension account, you have the opportunity to reserve yourself against this process. You will have three months to make a reservation. If you decide to gather the pensions savings in your pension account before the three-month deadline expires, you may accelerate the pooling process.

How will pension capital that is gathered in the own pension account be affected?

Pension capital that is gathered in your own pension account will have the same investment choice as your defined contribution pension. You can change the investment choice on your own pension account at any time. You may choose from the investment alternatives (profiles or funds) that apply for the defined contribution pension scheme. If you want other investment alternatives for previous pension earnings, you may choose another pension provider.

Please contact the pension provider of your pension scheme if you have any questions about the investment options that apply to your agreement.

The pension capital that is transferred into your own pension account is kept separate in the own pension account. This is done in order for the pension provider to be able to calculate the respective costs for you and your employer (the employer pays for the management of pension being earned while you yourself pay for the management of previous earned pension).

You may move your previous pension agreements to another pension provider. However, as previous pension agreements already have been merged, they cannot be divided into the original agreements. Your previous pension agreements will thus form a new pension capital certificate.

Am I obliged to have my own pension account managed by my employer’s pension provider?

No, you can choose any pension provider to manage your pension account, either the company's provider or another provider. The right for employees to choose their own pension provider for the defined contribution pension scheme is new and introduced by the rules on own pension account.

Choosing a pension provider may affect your pension costs, either in a positive or negative way. You should examine the prices that apply before choosing a provider.

You are not obliged to gather your pension capital certificates in the own pension account. Please note that you will continue to pay for the administration of each separate agreement you choose to keep outside your pension account.

What are the benefits of having an own pension account?

There are several benefits of an own pension account and the three main benefits are as follows; Firstly, if you choose to maintain your pension account within the employer’s pension scheme, your employer will pay for your administration costs. Secondly, you will also be entitled to the same fund management fee as your employer, and these may often be lower than the ones that apply to individuals, due to your employer’s negotiating power. A third benefit is that by gathering your pension agreements in one place, you will have better overview of your total pension savings.

The vast majority of employees are expected to experience lower pension costs with an own pension account. When all pension agreements are gathered in one place, your administration costs will decrease or even cease completely. If you also have your own pension account in the employer’s defined contribution pension scheme, the employer will cover all administration costs. As mentioned above, you are also entitled to the same fund management fee as your employer.

Who will have an own pension account?

Employees in the private sector with a defined contribution pension will have their own pension account. Employees in the public sector and employees in the private sector with defined benefit or hybrid pension schemes will not have their own pension account and thus will not have their pension earnings gathered automatically. You may still have pension agreements that can be accumulated. If you log into Norsk Pensjon you will get an overview of your pension agreements. You should also consider contacting your pension provider for further advice.

Which costs does the employer cover if I choose a pension provider myself?

The employer pays pension savings (contributions) for you monthly, and also covers costs for administration and management of the pension you earn while you work in the company.

If you have chosen a pension provider yourself, you will receive a certain compensation for management costs from your employer. If your provider has higher prices than the employer's pension provider, you will have to cover the additional costs yourself. Conversely, if your supplier has lower prices, the profit will go into your account as additional pension savings.

Can I reserve from having my own pension account?

All employees who have a defined contribution pension scheme will have their own pension account. You can however reserve yourself against having your pension capital certificates automatically collected in your own pension account. The reservation must be made within three months of receiving information about your own pension account (when the rules enters into force, you have until May 1st. 2021 to make a reservation).

Finance Norway is developing a reservation solution through Norsk Pensjon, where you can log in and make reservations against having pension capital gathered in your own pension account. If you decide to make a reservation, your pension agreements will not be collected. and you will have to pay administration costs for each of the agreements you choose to keep separate from the account.

A reservation is valid for an unlimited time, until you choose to remove it.

If you have already decided that you wish to collect your pension capital in the own pension account, you can also use the solution in Norsk Pensjon to accelerate the gathering process.

You can move your own pension to another pension provider at any time. You may also move only previous pension savings out of the account and to another provider. As your previously earned pension capital is merged when gathered in the account, previously earned pension capital will constitute one pension capital certificate if moved out from the account.

Which pension agreements can be gathered in the own pension account?

Pension capital certificates from previous employments will be transferred automatically to the own pension account. There are some exceptions, however:

Pension capital certificates from where pension withdrawal has begun cannot be gathered in the pension account. The following pension agreements can be collected in the own pension account, but your pension provider must be contacted in advance:

  • Pension capital certificate with an annual interest rate guarantee
  • Pension capital certificate that has a job-specific retirement age
  • Individual pension savings agreements (IPS) established before 2017
  • Individual pension saving agreements after the former IPA regulation

Paid up policies, deferred pension from public service pension and pension certificates from hybrid pension scheme cannot be transferred into a separate pension account

What happens to my own pension account when I resign from my job?

If you resign from your job with your current employer, you will maintain the pension you have earned, regardless of the duration of your employment. If you are re-employed at an employer with a defined contribution pension scheme, an own pension account will be established with your employer's pension provider or with a pension provider you have chosen. Previously earned pension is automatically transferred to the new own pension account unless you reserve yourself against the transfer.

Your own pension account will follow you throughout your professional career as long as you are employed by a company with a defined contribution pension scheme.

I have several employers - with which employer will my own pension account be created?

If you have several employers with a defined contribution pension scheme, you will have an own pension account for each employment.

Pension capital certificates from previous employment will be transferred to the pension account with the largest balance.

What will happen if I become disabled?

If you become disabled, you will keep your own pension account.

Employees in a defined contribution pension scheme will earn retirement pension as the employer pays pension contribution.

If the pension scheme you are a member of includes a disability pension scheme, you may be entitled to a disability pension. However, not all pension schemes in private sector include disability coverage.

All defined contribution pension schemes include a waiver of contribution. This insurance ensures that old-age pension is earned even if you become disabled. The contributions from this insurance normally cease at the age of 67. Note that the contribution exemption does not provide pension in the event of disability and must not be confused with a disability pension scheme.

You may choose which pension provider to manage your pension account, either the employer's pension provider or any other pension provider.