This means that employees who leave an AFP-covered firm toward the end of their career — even after many years of participation in the scheme — may lose entitlement to a benefit estimated at close to NOK 1.5 million in present value.

This report has been prepared by Statistics Norway on behalf of LO and NHO and is a direct continuation of the analytical work initiated with the LO/NHO report from 2021 and further developed in Fredriksen et al. (2023). The report focuses on the variants of a new AFP scheme adopted by the LO Congress in 2025, combining new analyses of alternative schemes with updated calculations based on more recent data and assumptions. Since the 2021 report, the AFP fund has nearly doubled in size, and the number of individuals covered by the scheme has increased. These changes in the initial conditions significantly affect the results and make direct comparisons with earlier calculations challenging. All calculations have been carried out using the MOSART microsimulation model, which uses administrative register data for the entire population to project career paths, retirement behavior, and pension payments.

The report particularly analyzes a temporary three-tier scheme based on the resolutions adopted by the LO Congress in 2025. The scheme provides three separate pathways into AFP during a transitional period: (i) the current qualification rules are maintained for the 1965–1975 birth cohorts; (ii) a new seniority rule secures AFP under the current framework for individuals with at least 18 years of total accrual in a collectively bargained firm and at least 7 years after age 50, even if the ordinary qualification requirements are not met; and (iii) an accrual-based scheme in which the benefit is calculated proportionally based on income earned in AFP-covered firms from 2020 onward — for all individuals who do not qualify through the first two pathways. In the calculations, the accrual-based scheme applies only to cohorts born in 1976 and later. It is emphasized that the accrual-based scheme remains a qualification-based scheme and not an individually vested right, as is the case, for example, with defined-contribution pensions. In addition to the three tiers, the LO Congress resolution assumes that disability pension recipients should be entitled to AFP based on accrual earned up to the time disability occurs.

The calculations are illustrated through two main alternatives: a contribution/benefit-neutral alternative in which the accrual rate is maintained at 0.314/5.0 percent for AFP1/AFP2 and the contribution rate is adjusted to the necessary level, and a premium-neutral alternative in which the contribution rate is kept fixed at the current 2.7 percent and the accrual rate is adjusted accordingly. AFP1 is the transition component based on income history under the current calculation scheme, while AFP2 is a new accrual component based on income earned in AFP-covered firms from 2020 onward. The contribution rate is the rate paid into the scheme by firms. Both alternatives are calibrated to achieve full funding of the AFP fund’s legal obligations by 2050.

The results show that the temporary three-tier scheme makes the scheme more inclusive and reduces the share of workers who fall outside the system, but it also entails higher costs and greater liabilities during the transition period than a pure accrual-based scheme. The report also analyzes a range of alternative designs and assumptions, including upper and lower limits for pensionable income, minimum required time in the AFP scheme, the effects of increased participation in collective agreements with AFP coverage, and the impact of higher retirement ages in line with increases in life expectancy. The report shows that the choice of discount rate has major implications for the assessment of the fund’s size and the timing of full funding.

The key trade-off identified in the report is threefold: benefit levels for individuals, broad inclusion of workers with a genuine connection to the AFP sector, and financial sustainability through sufficient contribution rates and fund accumulation. It is not possible to fully achieve all three objectives simultaneously, and the specific choices made in one area will constrain the other two. It is ultimately up to the social partners to balance these considerations in any future reform decision.