Ole Kristian Olsby Lise Gran June 29 2022 Pension committee proposes changes to current pension system Littler | Employment & Immigration - Norway Ole Kristian Olsby, Lise Gran Employment & Immigration ProposalsCommentIn 2020, the Solberg government appointed a committee with a mandate to evaluate whether the long-term goals of the pension reform could be achieved and to propose possible adjustments to the current rules to ensure the pension system's economic and social sustainability. The 12-member committee is led by Kristin Skogen Lund and is composed of politicians, leaders, union representatives and economic experts.ProposalsOn 16 June 2022, the committee presented its report to the Ministry of Labour and Social Inclusion. The committee's main conclusion was that the pension reform has been successful in the sense that it has eased the pressure on central government finances in the long run, but that adjustments should be made to ensure social sustainability.The main features of the committee's conclusions and proposals are as follows:There is currently no need to tighten or change the pension system to ensure its financial sustainability.However, adjustments are needed to ensure the social sustainability of the pension system.The three key proposals for ensuring the social sustainability of the pension system are that:the age limits for the earliest and latest withdrawal of old-age pensions should be increased in line with the development of life expectancy and a "standardised retirement age" should be introduced;the minimum benefits in the pension system (ie, the minimum pension) should follow the general development of wealth; andthose who receive disability benefits should be guaranteed a reasonable old-age pension.The part of the proposal that will broadly affect the population and create the most debate is the change to the minimum age limit for withdrawing an old-age pension. Unless special age limits have been granted, employees must be 62 years old to gain access.A basic principle in the pension reform is that, because people live longer than previous generations, they must work for longer to earn a reasonable pension. In the committee's view, the current 62-year limit for drawing an old-age pension is not compatible with this. People who retire or start drawing a retirement pension "too soon" will receive a poor pension. The committee will, in other words, "force" people to work much later into life.The committee proposed to introduce the term "standardised retirement age", which will be the age at which various age groups must work to receive a normal pension. The standardised retirement age will increase in line with the changes in life expectancy for the various cohorts. For the increase in pension earnings to compensate for the increase in life expectancy, this means that the standardised retirement age will rise by two-thirds of the increase in life expectancy.The changes in the standardised retirement age will again govern the changes in the age limit for the earliest and latest withdrawal of old-age pension. In order to make up for the backlog, however, the committee stated that the increase in the age limit for the earliest withdrawal should take place faster than the increase in the age limit for the latest withdrawal. In practice, this means that, for example, that a person born in the 1990s will have a "standardised retirement age" of something more than 70 years and an age limit for withdrawal at the earliest of something more than 65 years.CommentThe pensions committee's report will be one of several voices in a growing political debate that will likely intensify over the course of 2022. Adjustments and reversals of parts of the current regulations are a political issue for large unions and for parts of the political left. In particular, there is a call for a scheme for so-called "hard workers".Unions have appointed a separate committee that will submit a report in Summer 2022. This suggests that pensions are emerging as a major political issue where changes must be expected.For further information on this topic please contact Ole Kristian Olsby or Lise Gran at Homble Olsby | Littler by telephone (+47 23 89 75 70) or email ([email protected] or [email protected]). The Homble Olsby | Littler website can be accessed at www.homble-olsby.no.