COVID-19 has had a pronounced effect on businesses, regardless of industry, around the world. Each industry, however, has been met with unique challenges in relation to the pandemic – how has COVID-19 shaped the direct contribution (DC) landscape, particularly in regard to Egen pensjonskonto?

Pensions in Norway have been in a state of change for some time and the pandemic has further accelerated the potential impact of the changes. Going back almost ten years, the state pension reform put companies and employees in the private sector on a journey that completely changed the pension landscape. Today, more than 9 out of 10 employees in the private sector have a DC pension scheme where pensions can be directly affected by changes in the stock market.

Due to COVID-19 and its impact on the economy, financial security has been front of mind for employees and employers. Historically Norwegians have placed a lot of trust in the government and their employer to provide a sustainable pension but with the increased volatility in the market and the introduction of the Egen pensjonskonto / Own pension account in 2021, employees will need to take far greater personal responsibility over their pension and managing savings or face long-term financial risks. With the new regulations, individual employees can now choose a different manager for their pension portfolio than the one chosen by their employer. Depending on their situation, multiple options may lead to better or worse returns down the road so access to financial education and independent advice will be critical.  

Companies therefore now also have a responsibility to regularly review their DC plan design, maintain a robust governance framework and keep their employees informed on the realities of their pension, empowering them to select options based on sound investment advice. Mercer has been partnering with employers and their employees to establish sustainable DC governance and communication of benefits to safeguard their futures in these volatile times.