When should you consider a contractual pension?
- When you reach the age of 52 and only wish to work another 10-13 years
- When you start to consider a gradual work reduction
- When you are planning a less active lifestyle after you have reached the age of 62
What is a contractual pension?
Contractual pension is an early retirement scheme for everyone between the ages of 62 and 67 who has a tariff agreed AFP. Different conditions apply if you retire between the ages of 62 and 65 or after at you have reached the age of 65. The principal rule is that you shall not get a reduced pension when you reach the age of 65, if you have had an AFP from for example you reached the age of 62. Contractual pensions are regulated through a tariff agreement.
Who gets a contractual pension
- You must have had an income of at least twice the National Insurance Scheme's basic amount (G) for 10 years since 1967.
- You must have had an income of at least 1 G for the last two years.
- You must have had at least 10 years of income over 1 G after reaching the age of 50 years, including the year you wish to begin your contractual pension.
- In order to get the best contractual pension when you have reached the age of 65, must you have at least 10 years of membership in the Norwegian Public Service Pension Fund after reaching the age of 50.
- You must have been in waged work up until the time of retirement.
- You can get contractual pension even if you work part-time.
- You can receive partial contractual pension, but only if you retain a minimum 60 percent position. The lower limit for a contractual pension is 10 percent.
- You cannot receive a contractual pension if you are on unpaid leave
How to apply for a contractual pension
- Your employer - assisted by you - must apply for your contractual pension using a dedicated application form available at employers pages at www.spk.no (log in) at least two months before the month you wish to begin your contactual pension.
Calculation and amount
When you receive a contractual pension, you must you give the Norwegian Public Service Pension Fund and NAV notification if you earn more than NOK 15,000 a year in addition to your contractual pension payment. If you earn more than NOK 15000 a year, your pension will be adjusted in light of the information you have provided on your past and future income.
Pension between the ages of 62 - 65
You will get the same as you would have received if you had retired with a retirement pension from the National Insurance Scheme at age 67. You will also get a monthly contractual pension supplement of NOK 1700.
Pension between the ages of 65-67
Upon reaching 65 years of age, you get either a contractual pension equivalent to 66 percent of your contribution to the pension fund or a National Insurance Scheme calculated contractual pension.
The Norwegian Public Service Pension Fund calculates which of these alternatives you are entitled to, and you are paid in accord with the most favourable alternative.
Transition to a retirement pension
When you reach the age of 67, your contractual pension is converted to a retirement pension. You will get a retirement pension from both the National Insurance Scheme and the Norwegian Public Service Pension Fund. This gives a higher payment than provided by a contractual pension alone.
Find out more about contractual pensions
Several separate factors influence how your contractual pension is calculated. Your immediate superior or the pensions officer at your place of employment can advise you and give you information about contractual pensions. You can then collaborate to work out the best solution.