NORWAY - Norway's introduction of mandatory occupational pension schemes may keep interest rates low, experts say.
The new system, which is set to be introduced in January 2006, will generate between 2bn and 6bn NOK (circa €750m) annually in pension savings.
Erlend Lødemel (pictured), Senior Economist, DNB Nor Markets, said that the increased pension savings may help to keep interest rates down.
Much of the capital will be placed in the stock market, but some of the capital is likely to end up in the interest rate market which maylead to a increased demand of government bonds and thus lower interest rates, he said.
Between 550 000 and 600 000 employees that are currently without occupational pension schemes will be covered by the new system.
Under the new legislation the minimum requirement is to contribute 2% of wages, if the employer establishes a defined contribution scheme.
In the short term, the occupational pension reform will have a relatively moderate effect on the market. The effect in the longer term could be more pronounced, as these payments will continue every year and make up a steadily increasing share of savings, Lødemel said.
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