A move by the Norwegian government in late December to reverse a pensions-related part of new high-earner tax has been welcomed by the Nordic country’s pension fund lobby, with the association saying both funds and sponsors will be spared extra work and costs.
An extraordinary tax for incomes over NOK750,000 (€71,291), which was proposed in last autumn’s national budget and later passed by the Storting (Norway’s parliament), which originally entailed employers paying extra tax on pension contributions as well, has been modified by new regulation published by the finance ministry on 20 December.
Christer Drevsjø, chief executive officer of the Norwegian Pension Fund Association (Pensjonskasseforeningen), said in an email to pension fund leaders on 22 December: “This is gratifying and saves pension funds – and sponsors – a lot of extra work.”
The tax rise was introduced in the 2023 budget plan unveiled in October 2022, as part of plans for tax changes designed to reduce the burden on those earning under NOK750,000, while making those on more than that collectively pay NOK3bn more in income tax.
Trygve Slagsvold Vedum, the finance minister of Labour prime minister Jonas Gahr Støre’s government, which took power in Norway a year ago, at the time described the budget as “strongly redistributive”.
Drevsjø told IPE that regarding pensions, the issuance of the new regulations did represent a U-turn by the government, as pension premiums were now being excluded from the extraordinary taxation of salaries above NOK750,000.
“This is both wise and rational, and saves both employers and pensions providers from large workloads and costs,” he said.
Drevsjø said the tax proposal in the budget had had some “unfortunate aspects”, which he had highlighted in a column in the newspaper DN on 26 October.
The new regulation laid down and taking effect at the beginning of this year – complementing the statutory provision in the National Insurance Act § 22-3 – states: “Additional employer’s tax shall not be calculated on the proportion of the employer’s premium payment and subsidy to a collective occupational pension scheme which is public or which falls under § 6-46 of the Tax Act.
“The same applies to lump sums to replace the right to a pension in employment that is not secured by premiums and grants, and lump sums or grants that are paid to secure the right to such a pension.”
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