New AFP scheme could hit young workers

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Next year, employees risk the AFP benefit, Contractual early retirement pension (AFP)reducing sharply if they are not in a company with a collective agreement throughout working life.

In last year’s wage settlement, the parties agreed on a change that means that from next year, there will be a better connection between the time you work in a collective agreement company and having the right to AFP wrote Dagbladet newspaper.

“In the future, it will be very financially unfavourable to be without a collective agreement in the private sector” said manager, Jon Olav Bjergene, of the negotiation department in Trade and Office.

Only half of employees in the private sector work in companies that offer AFP showed figures from the research foundation, Fafo.

‘’In companies with many young employees, one has refused to enter into collective agreements.

But with a new arrangement, the loss of standing outsideunionised working life will be considerably higher than toda’’ said Bjergene.

A woman born in 1990 with 550,000 in annual salary will, as an employee from 25 to 62 years of age, be bound to receive an annual life-long AFP benefit of NOK 47,850 if she retires at the age of 67. If she lives to 100 years old, the AFP will amount to NOK 1.5 million.

If, on the other hand, she works for several years of her career in a company without a collective agreement, she could get several hundred thousand NOK less as AFP.

© NTB Scanpix / #Norway Today

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