The Norwegian system consists of a public pension system, a mandatory occupational pension system and personal pension saving arrangements.The Norwegian pension market is a small market dominated by insurance products. About 75% of private pensions in the Norwegian pension market are funded by insurance contracts and the top five insurance companies control about 94% of the market.

The state pension scheme provides a satisfactory pension level based on a flat-rate basic pension and an earnings-related supplement that covers all employed and self-employed persons. People employed in Norway or who have been living in the country for more than one year are required to join the system.

Employee contributions amount to 7.8% of income whereas the employer pays 14.1%. In contrast to most European countries a maximum earnings ceiling does not apply, consequently total income is charged.

The statutory retirement age is 67. Estimates by the OECD state a gross replacement ratio for average earners of approximately 60%.

In 1966 Norway established the National Insurance Scheme Fund (NIS Fund), which was intended to be the funding vehicle for reserves stemming from a surplus in the social security system. To further strengthen Norway's financial position to meet future pension liabilities, the Petroleum Fund was established in 1990.

Both funds merged in 2006 to make up the Government Pension Fund that consists of two parts, the Government Pension Funds - Global and the Government Pension Funds - Norway. The latter reflects the old NIS Fund.

Pension provision is compulsory in Norway under specific conditions that are related to the number of employees and their working hours. The new legislation led to a strong increase in sales of mandatory pension products, thus encouraging new providers to enter the market.

Traditionally, defined benefit (DB) schemes were the prevailing form of occupational pension provision. Large employers predominantly offer them. However, defined contribution (DC) schemes are becoming increasingly popular. A number of banks and investment funds have entered the market as potential providers for such schemes. But insurance schemes are still the dominating financing vehicle.

Occupational pension schemes can be funded through a group insurance arrangement or a pension fund. Insurance is the dominating financing vehicle for occupational pension plans although the number of pension funds is growing rapidly.

There are no special regulations regarding the appointment of an investment manager for pension funds. The market is open for external financial service providers located and licensed in other EEA countries.

According to the 2001 pension legislation, DB schemes have to be fully funded at all times.

Employer contributions towards an approved DB pension plan are fully tax deductible with no limit on the level of contribution. However, total benefits from both first and second pillar pensions are limited to 100% of salary up to six times the basic amount plus 70% of salary between six times and 12 times the basic amount. In order to receive an approved status, a defined benefit plan must not provide pensions on a pensionable salary in excess of 12 times the basic amount.

For DC plans the contribution rate is limited to 5% of salary between two and six times the basic amount plus 8% of salary between six and 12 times the basic amount. These contributions are fully tax deductible.

Benefits paid from a tax-qualified pension plan are treated as taxable income of the recipient.

Insurance is the dominant financing vehicle for occupational pension plans. About 75% of private pensions are funded through insurance contracts. Tax treatment of contributions and benefits is the same as for pension funds.

The Organisation for Economic Co-operation and Development (OECD) - http://www.oecd.org