OTP - Mandatory occupational pension scheme
OTP - Mandatory occupational pension scheme is a pension scheme for your employees. As an employer, you’re required to pay an amount corresponding to at least two percent of the employees’ salaries for their pension.
Most employers in the private sector must establish a pension scheme for their employees.
From 1 January 2022, the following rules apply
- All employers who are obliged to provide a pension scheme must save at least 2 percent of the employees’ income from the first krone.
- The minimum requirement of an FTE percentage of 20% (employment percentage) to be entitled to a membership in the pension scheme is removed.
- The age limit for a membership in the pension scheme is now 13.
- Employees are entitled to a membership in the pension scheme when the income exceeds NOK 1,000, or NOK 10,000 if your enterprise is a tax-exempt organisation.
- The exemption rules for seasonal workers are removed.
As an employer, you must have adapted your pension scheme to the new rules by 30 June 2022, at the latest.
The old rules, as described below, will still apply in the transitional period up until you’ve adapted the pension schemes to the new rules. Read the article at regjeringen.no (in Norwegian only).
Requirements for you as an employer:
You must establish a pension scheme for your employees when you meet at least one of the following criteria:
- The enterprise has at least two persons with working hours and salary equivalent to 75 percent or more of a full-time position.
The flower shop, Fiona ENK, has two employees both with a full-time equivalent (FTE) of 80 percent. The flower shop must set up an OTP scheme.
If the flower shop, Fiona ENK, has two employees both with an FTE of 50 percent, it does not need to set up an OTP scheme.
- The enterprise has at least one employee, with no ownership interest in the enterprise, and with working hours and salary equivalent to an FTE of 75 percent, or
The painter company Fine Farger AS has one employee with no ownership interest in the enterprise, and with an FTE of 100 percent. Fine Farger AS must set up an OTP scheme.
If Fine Farger AS has one employee with an FTE of 50 percent, and the owner has an FTE of 100 percent in the company, it does not need to set up an OTP scheme.
- The enterprise employs persons that each have working hours and salary corresponding to 20 percent or more of a full-time equivalent (FTE). In sum, they perform work corresponding to at least two full-time positions.
Bra Film & Foto AS has 20 employees, whereof 10 have FTEs of 20 percent, and 10 have FTEs of 50 percent. Bra Film & Foto AS has seven full-time equivalents and must set up an OTP scheme.
If Bra Film & Foto AS has eight employees, all with FTEs of 20 percent, they do not need to set up an OTP scheme.
- 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.
Establishing an OTP scheme
Within six months of the obligation arising, you must establish an OTP scheme with an approved pension scheme provider (bank, life insurance company, pension fund, defined contribution pension enterprises or management companies for securities funds).
As an employer, you pay an amount corresponding to at least 2 percent of your employees’ salary to the pension scheme. You can agree on a higher percentage or rate for the premiums for your employees, within the scope of the legislation concerning pension.
The pension scheme must be equal for all employees. You can get more information about calculating pension from the pension scheme provider you have an agreement with.
If your business has a foreign pension scheme, Finanstilsynet (the Financial Supervisory Authority of Norway) can decide if the pension scheme meets the requirements of the OTP Act.
Registering employees in the pension scheme
If your business is required to have a pension scheme, the pension scheme applies to employees who:
- are a compulsory member of the National Insurance Scheme
- have reached the age of 13
- have income exceeding the limit required for mandatory salary reporting in the A-ordning. The limit is NOK 1,000, or NOK 10,000 if your enterprise is a tax-exempt organisation.
You must register employees who are entitled to OTP in the pension scheme with effect from the first day of employment.
Reporting via the a-melding
If your business is required to have an OTP, you must state in the a-melding which pension scheme arrangement you have entered into an agreement with.
When you’re establishing a pension scheme for your employees, you can choose between a defined contribution pension scheme, an enterprise pension scheme or an occupational pension scheme.
Defined contribution pension scheme
Defined contribution pension scheme is the most common pension scheme. In a contribution based pension scheme, the annual savings are set to a percentage of the salary (minimum 2 percent). The pension payments will depend on the contributions and the yield on the contributions.
Enterprise pension scheme
In an enterprise pension scheme (also known as a benefit scheme), the employee must be ensured the agreed pension level, also considering pension from the National Insurance Scheme. The premium will vary from one year to the next, and it will increase in line with the salary development.
Occupational pension scheme
Occupational pension schemes are a combination of defined contribution pension schemes and enterprise pension schemes. In the earnings period, the employer must add to the members’ pension holdings through annual deposits that are a percentage of salary. The pension holdings ensure a defined payment from the retirement age.
If you have an OTP obligation and do not establish a pension scheme, you will be ordered to establish an agreement in the event of an inspection.
If you’ve not complied with the establishment order by the given deadline, you’ll be charged with an enforcement fine.
The enforcement fine is NOK 250 per employee per day, and it will continue to accrue until it is documented the pension scheme has been established.
Employers that do not comply with their duties (Act relating to the mandatory occupational pension scheme) to create or pay contributions for mandatory occupational pension for their employees, may be fined or sent to prison for up to 2 years.
You have a right to appeal if you are ordered to establish a pension scheme, or if you receive a decision concerning enforcement fine.
The appeal deadline is three weeks from the date on which you received the decision. You may ask that the implementation of the decision is deferred.
How to appeal:
You must state which decision you’re appealing against and state the reason for the appeal. Your appeal must explain why you believe the decision is wrong, and you should submit any proof we may need in order to process the appeal.
We will re-assess your case. If the decision is not changed, your appeal will be sent to the Directorate of Taxes for processing.
Obligatorisk tjenestepensjon (OTP)
Filmen handler om obligatorisk tjenestepensjon, forkortet til OTP. Vi forklarer når du som arbeidsgiver har plikt til å opprette OTP for ansatte, og hvordan du skal rapportere OTP i a-meldingen.