Social benefits
Illness Benefits, Occupational Injuries, Pension Scheme
The right to illness benefits for sole proprietorships and owners of unlimited companies starts from the 17th day of absence. The benefit equals 65 per cent of the ordinary income.
You may achieve a better compensation by a voluntary additional national insurance contribution. There are three alternatives:
65 per cent of the ordinary income from day 1 if you pay an additional insurance premium of 1.7 per cent
100 per cent of the ordinary income from the 17th day if you pay an additional premium of 2.9 per cent
100 per cent of the ordinary income from day 1 if you pay an additional premium of 10.8 per cent.
Regardless of the ordinary income, the upper limit for illness benefit is set to 6G, where 1G is the National Insurance basic amount (of money) used for calculating benefits from the social services. In 2007, 1G equals NOK 66 812 per year.
If you suffer some kind of occupational disability within four weeks from the date the social services received your application for inclusion in the national insurance scheme, you are not entitled to the compensation or social benefits normally covered by the insurance scheme.
The premium for the insurance is deductible on your tax return.
Calculation of the basis for illness benefits
The basis for the illness benefits will normally follow the income defined as the basis for calculation of pension points. The benefits are then calculated on basis of the average pension points for the last three years. The definition of the pension points is not given here.
Note that it is the income defined as basis for the pension points that warrants the right to illness benefits, not the income derived from the business activities. If you have income both as an employee and from business activities at the same time or in different periods, it is the combined income that forms the basis for calculation of the illness benefits.
Maternity benefits
Sole proprietors receive cash maternity benefits on the basis of the average pension points for the last three years. The pension points are a function of the income defined as the basis for future pension. The cash benefit equals 65 per cent of the calculated basis.
In order to receive 100 per cent cash maternity benefit according to the calculations mentioned above, you must, at least 10 months prior to the birth, have entered the voluntary national insurance scheme. If your coverage is 80 per cent, then the maternity benefit will be 80 per cent of the calculated basis.
Information about the scheme is available at the local office of the Norwegian Labour and Welfare Organization (NAV).
Mandatory occupational pension
As from 2006, a mandatory occupational pension scheme was introduced.
The duty to have an occupational pension scheme applies to companies, both taxable and
at least two persons who both have working hours and wages that represent 75 per cent or more of a full time position
at least one employee, without ownership interest, who has working hours and wages that represent 75 per cent or more of a full time position, or
persons, who each have working hours and wages that represent 20 per cent or more of a full time position, and together carry out work representing at least two
The act does not apply to employers who have a pension scheme in accordance with legislation or collective agreements that apply to state or local authority employees.
Employers must either have a defined contribution or a defined benefit pension scheme. Defined benefit schemes provide
Employers will pay contributions into the scheme every year, so that employees earn pension entitlements. The contribution must be at least two per cent of the employees’ earnings between 1 G and 12 G in a defined contribution scheme. A corresponding requirement applies to defined benefit schemes. In addition to the contribution, the pension scheme shall also contain an insurance element that ensures that employees continue to earn pension entitlements in the event of disability. It is permitted to exclude employees under the age of 20 and those in
The main rule is that pensions shall be paid for at least 10 years from the age of 67 years. The size of the annual pension will depend on several factors. In contribution schemes, pension payments will depend on the size of the contribution, the number of years contributions have been paid, the return on the pension assets and the length of the period during which a pension is paid. In defined benefit schemes, the pension will normally be stipulated as a certain percentage of the employee’s salary on retirement.
The size of the annual pension will therefore depend on how many years the employee has worked and his/her salary on retirement.
