OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

The Ageing Challenge in Norway

Ensuring a Sustainable Pension and Welfare System

Norway will face a fast maturing old age pension scheme over the 30 next years whereas oil revenues will supply only a part of implicit liabilities related to the present generation. This working paper examines the recently proposed new measures to strengthen long term fiscal sustainability in Norway. Even though a broad agreement was reached in the parliament on the proposed principles of pension reform, crucial elements are still under discussion, among these the decision on a flexible retirement age based on actuarially fair notional accounts and the strength of the link between income and benefits. Estimated savings arising from strengthened work incentives introducing a longevity coefficient and less generous indexation are three percentage points of GDP over the long term compared to an expected nine percentage points of GDP financing gap for welfare spending. For the proposals to have maximum impact, public subsidies to existing early retirement schemes should be removed and eligibility for disability pensions and long-term sick leaves tightened. This paper relates to the 2005 OECD Economic Survey of Norway (www.oecd.org/eco/surveys/norway).


Keywords: Norway, disability, sick leave, fiscal sustainability, pension reform, work incentives
JEL: J26: Labor and Demographic Economics / Demand and Supply of Labor / Retirement; Retirement Policies; J11: Labor and Demographic Economics / Demographic Economics / Demographic Trends, Macroeconomic Effects, and Forecasts; H53: Public Economics / National Government Expenditures and Related Policies / National Government Expenditures and Welfare Programs; H55: Public Economics / National Government Expenditures and Related Policies / Social Security and Public Pensions
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