The leader of the organization representing retired Norwegians is fed up with how they’re losing purchasing power year after year. Jan Davidsen, a former labour union leader, is now revving up efforts to legally challenge the state over how pension payments are regulated.
“We’re not going to take this any longer,” Davidsen declared from the podium at the annual meeting of Pensjonistforbundet on Monday. “Therefore I believe that we must examine the judicial foundation for the way pension payments are carried out.”
He’s furious on behalf of retirees who only receive annual “pay raises” equal to average wage growth minus 0.75 percent. That’s going to result in pension payments with raises of less than Norway’s low inflation rate, and probably below 2 percent.
“Do they have a right to do this to us?” Davidsen questioned as he rallied his troops from the podium. “Is this what they promised us when they (state politicians) launched state-funded pensions?”
He was met with a standing ovation from the 181 elected members of the retirees’ organization with voting rights. Even in the world’s wealthiest country, with its so-called cradle-to-grave social welfare systems, pension payments aren’t likely to yield enough to live on for those who don’t own their homes, have little if any debt and lack personal savings.
And even in the country with the world’s largest sovereign wealth fund known as the Oil Fund, which is supposed to secure pensions for future generations, the actual amounts paid out to most Norwegians are modest indeed.
Since state-funded pensions were created after World War II, most Norwegians were generally assured around 66 percent of their incomes at retirement age. The annual amount is based on a combination of both state funding and that provided by both private and public employers. Folks working in the public sector generally came out best upon retirement, in return for lower salaries on average during their working years.
Pension reform eroded guarantees
Recent and massive pension reform in recent years, however, has eroded that guaranteed amount. Private employers claimed they could no longer afford funding pensions that would guarantee 66 percent at retirement, forcing the employees to take on a large share of the responsibility.
Now most employers, especially in the private sector, only pay annual amounts equivalent to anything between 2 percent and 8 percent of an employee’s salary into a pension account that the employee can take with him or her when changing jobs. Young Norwegians are already being warned that their pensions may only amount to 50 percent or less of what they’re earning when they retire. Everyone is being encouraged to save more for retirement themselves, to augment pension payments.
It’s how those payments are calculated that’s now angered Davidsen and his troops of what the Norwegians call pensjonister (pensionists, or retirees). The tiny raises allocated by the state mean that retirees have lost purchasing power over the past four years, and will so this year too.
“The Parliament expected that retirees would also be able to take part in the increased affluence that occurred when pension reform was approved,” Davidsen said. “We now expect that the Parliament takes its own measure seriously.”
Demanding negotiating rights
With his labour union background, Davidsen also claimed that his organization demands the right to negotiate raises for those already retired. Those gathered for the annual meeting at the Storefjell Resort Hotel in the mountains of Gol applauded that demand as well.
“We have to take care of those earning the least,” Davidsen said. While many retirees in Norway have recently found themselves with homes worth much more than they’d ever expected, there are also those who never were able to buy a home, and have much more restricted household economy even in affluent Norway.
Davidsen’s organization is the country’s largest for those both retired and on disability, with 230,000 members.