Employees Pension Scheme — OTP

In Norway, the pension system is divided into three parts: Retirement pension from the National Insurance Scheme (NAV-Folketrygden), Occupational Pension Scheme (OTP - Obligatorisk Tjenestepensjon - Tjenestepensjonsordning) or contractual early Contractual Early Retirement Pension (Avtalefestet Pensjon - AFP) from employers, and private Personal Pension Savings (IPS). It is important that you know about all the levels in the pension system to give you an idea of how much your pension will be.

OTP | ITP stands for Occupational Pension Plan and Individual Retirement Pension Plan in Norway. It's a structured pension scheme in Norway designed to provide employees and self employed with enhanced retirement benefits beyond the basic state pension.

Obligatorisk Tjenestepensjon (OTP) is a Mandatory Company Occupational Pension Scheme for your employees. As an employer, you have to set aside a percentage of their salaries for their pension. Most employers in the private sector in Norway must establish Registered Pension Plans for their employees (RPP).

OTP | ITP functions by allowing employers and employees to contribute funds towards an enhanced pension plan. This additional provision complements the basic state pension and provides employees with better retirement benefits.

There are currently three types of Supplementary Pension, and they are also called Employees Pension Plan (EPP) * Defined Contribution Pension (Innskuddspensjon). * Hybrid Pension(Hybridpensjon). * Defined Benefit Pension (Ytelsespensjon).

To establish an Employees Pension Plan (OTP | ITP) in Norway, your company must meet at least one of the following criteria: * Two Persons with 75% FTE or More: If your enterprise has a minimum of two individuals who work with hours and receive a salary equivalent to 75 percent or more of a full-time position, you are required to establish an OTP | ITP pension scheme. * One Employee with 75% FTE and No Ownership Interest: In cases where your company employs one individual, without ownership interest in the enterprise, and this employee works with hours and a salary equivalent to 75 percent of a full-time position, establishing a pension scheme is obligatory. * Cumulative Work Corresponding to Two Full-Time Positions (FTE): If your business employs multiple individuals, each contributing working hours and a salary amounting to 20 percent or more of a full-time equivalent (FTE), and the total combined work performed by these employees corresponds to at least two full-time positions, a pension scheme must be established. These criteria ensure that companies with a certain level of employment engagement and contribution are required to provide their employees with an OTP | ITP pension plan, fostering financial security in their retirement.

* Private limited liability company (AS) * Public limited liability company (ASA) * General partnership (ANS) * Sole proprietorship (ENK) * Other company forms that have employees Public or municipal enterprises are not required to establish a pension scheme according to the OTP Act. If you’re self-employed without employees (owner of a sole proprietorship or partner in a general partnership) or freelancer, it’s optional to establish a pension scheme.

As of July 1, 2021, companies in Norway that fail to comply with the obligation of the OTP | ITP Employee Pension Scheme for their employees are subject to a penalty of 250 NOK per day per employee. This emphasises the importance of ensuring timely and accurate implementation of the Retirement Program to avoid these financial penalties and uphold employees' financial security.

Do you want to provide your employees with a better Retirement Pension Plan? For example, you can increase your pension contributions or offer insurances such as disability benefits, health insurance and travel insurance. Fill in the basic information on the form we will contact you. If you have additional questions, please send us an e-mail: post@localmarket.no or call us + (47) 23 89 88 63.