The ”new” pension system means that we will have to work longer than before for the same pension. The politicians would really prefer us to work until we are 70 years old. But even then, the total pension from the National Insurance Scheme and compulsory company pension from our employer will hardly be enough for us to maintain our pre-retirement standard of living.

The Norwegian Financial Services Association (FNH) estimates that nine out of 10 employees only have the compulsory company pension minimum scheme of two per cent of their salary between one and 12 G. So far, there also do not seem to be any major changes in a positive direction after these company pension agreements are entered into – by far the majority remain as a minimum scheme.

Want early retirement
The fact that the politicians want us to work until we are 70 years old does not necessarily mean that you and I want the same – or are able work for as long. According to Statistics Norway, six out of 10 employees aged between 50 and 61 are planning or want to retire before they reach the age of 67. Two-thirds say they want to retire at the age of 62.

These plans prove to agree with real life. In practice, we find the highest percentage of working “seniors” in the 50-54 age group – where around 80 per cent are in employment. After 54 years of age, the percentage in employment gradually decreases and ends up at 32 per cent for 66-year-olds.

Regular savings
So what should you do if you want to save some extra money towards your retirement? At ODIN, we believe that a monthly savings agreement is the most practical solution for the vast majority. You choose how much you want to save a month – the more you save the higher your pension will be. There is no commitment period – you decide yourself how long you want to save for. With a long time horizon – often 10, 20, 30 or 40 years - the difference between saving in the bank and in an equity fund can be huge. The graph on the right illustrates some of the difference.

Gradual withdrawal agreements
The general advice given by many financial experts is to sell shares gradually during the period leading up to retirement. As a pensioner, you should have your savings in the bank or at least in a money-market fund. However, since you can expect to be a pensioner for 25-28 years, this advice may be costly. At ODIN, we believe you should remain invested in equity funds while you are pensioner – the longer you remain invested the higher your total estimated pension. When you are going to start using your pension savings, a gradual withdrawal agreement is a good solution.

With a gradual withdrawal agreement, you only withdraw a certain amount of money – the rest remains invested in the stock market. When the stock market develops positively, you receive both a fixed payment from your equity fund savings (directly into your account) and a good return on the units you have not yet redeemed (sold).