Labour force participation among older persons after the Norwegian pension reform. 2015

A key goal of the Norwegian pension reform of 2011 was for older employees to remain in the workforce. One element of the reform was the opportunity to combine work and pension from the age of 62, without a reduction in pension.

In the years preceding the reform, the share of the population aged 60 and over who were in employment had already seen a degree of growth. However, the development since 2011 shows stronger growth for those aged 62-66 than for 60-61 year-olds. 62-63 year-olds had strong growth in the initial years of the reform, while 64-66 year-olds have shown strong growth in the last couple of years. This report primarily uses data on employees from The Register of Employers and Employees, which enables us to follow the development for older employees in the labour market over time. The figures show that the share of the population in employment has increased for both women and men. The growth has been particularly strong for employees in the private sector without a higher education.

Due to the nature of the reform, employees in the private sector with an AFP (contractual pension) could be expected to be the most affected. In order to examine this, we have followed 61 year-old employees in different industries from one year to the next. The share of 61 year-olds who were still working the next year increased by 5 percentage points in total when comparing the years before and after the pension reform. The growth is clearly stronger in the private sector. For workers in manufacturing industries, the growth was about 15 percentage points. Growth in industries dominated by the public sector was 2-3 percentage points, but these industries already had a high share of 61 year-olds who were working the next year before the pension reform was introduced.

The new pension reform of 2011 made it easier for the over 62s to combine work and pension, changes were made to the AFP in the private sector to encourage older employees to remain in the workforce, and employees could also combine work with old-age pension accumulated from national insurance contributions. The share of employees combining work and pension showed strong growth after 2010. In the 2nd quarter of 2010, 9 per cent of employees aged 62-66 were combining work with pension, while in the 2nd quarter of 2015, almost half of this group was combining work and pension. The share of employees who combine work and pension is higher in the private sector than in the public sector, and many more men than women combine work and pension. This may be because women have accumulated fewer pension rights and because there are fewer women than men in the private sector, where the growth has been strongest.

The opportunity to combine work with the old-age pension and AFP may have led to the downward trend in the share of persons aged 62-66 combining work with a disability pension. In 2010, 5.5 per cent of 62 year-olds combined work with a disability pension, while in 2015 the corresponding figure was 4.6 per cent. The disability reform of 2015 made it easier to combine work with a disability pension. The data combine work and a disability pension since it may be too soon after introduction of the reform to see any changes from the 2nd quarter of 2015 may not show any changes in the share of the population that.