NORWAY - Norwegian businesses must be given the opportunity to postpone registration with mandatory occupational pension schemes due to the burden of administration costs, says The Federation of Norwegian Commercial and Service Enterprises (HSH).
The Norwegian government proposed new legislation last Friday which will introduce mandatory occupational pension schemes for all private enterprises from July 1 2006. The new legislation will affect 600,000 employees in 130,000 enterprises, and the total cost for the companies is estimated to be NOK3.3bn (e419m).
The costs for the administration of the pension scheme will be covered by the company, and the minimum requirement is to contribute 2% of wages, if the company establishes a defined contribution scheme.
“The proposal is an important element towards safe pensions for all, and will ensure old age pension rights in addition to pension rights from the national social security system for most employees,“ said minister of finance Per-Kristian Foss.
But the proposal was criticised by The Federation of Norwegian Commercial and Service Enterprises (HSH) for bringing unnecessary administration costs for smaller companies.
The government should give the enterprises an opportunity to postpone registration with occupational pensions schemes until one year after employment, said Vibeke Madsen (pictured), head of HSH.
Madsen said she was particularly concerned about smaller companies in the service industry which employ staff on short term contracts.
Many of the enterprises that now will have to establish occupational pension schemes employ staff on short term contracts, that means contracts with a duration of less than 12 months. This is particularly apparent within the service industry.
Many of these enterprises will according to the proposal first have to pay contributions to the insurance companies and thereafter get their money paid back in premium funds.
This is not only an extremely inefficient pay structure, but also a considerable burden for enterprises with limited administration resources, said Madsen who pledged to work hard to get the government to change the proposal.
The proposed act will not apply to companies that have a pension scheme according to law or wage agreement for public employees.
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