Morten Jørstad thought everything was in order with his pension when he retired after a long career as an investment adviser in a bank. Like over half a million other Norwegians, he had saved up parts of his pension in fripolisar, that is to say, an active pension right. With the promise of a guaranteed return from the free policy, Jørstad thought that the pension was secure for the future. But when he checked the krone amount eight years later, he discovered that it had almost stopped. – I would call a free policy with guaranteed interest a robbery. It doesn’t work as well as it should. People get worse purchasing power every single year on the basis of this here, he says. Morten Jørstad had to investigate the case more closely. Photo: Anders Eidesvik / news – The guarantee is a joke Last week, news told news that hundreds of billions of pension kroner are locked up in free policies with interest guarantees that lose purchasing power every year. This means that the future payment in practice shrinks because the return is less than the wage and price growth in society. Jørstad became increasingly frustrated that the payouts from his ignited pension right, i.e. the free policy, barely changed over time. The reason is that the regulations surrounding freelancers are strict. One must be assured of a guaranteed return of around 3.5 per cent annually. And it is up to the insurance company, or life company, to ensure this. The key word is guaranteed Only in the event of a higher return than the guaranteed one, pension payments can be larger in the future. The problem is that the money is invested in products that usually give little profit. In order to guarantee a return, most of the money is invested in interest-bearing securities that give a low but certain profit. Only a small part is invested in shares, which over time give higher dividends. – The guarantee is a joke. I was guaranteed 4 per cent interest, but I have counted on this and have around 0.19 per cent return in the eight years I have had a free policy, says Jørstad. Jørstad shows news’s broadcaster how much his purchasing power has fallen in recent years. Photo: Anders Eidesvik / news He has shown news the bank statements which show that payments have in practice been completely stagnant since 2016 to 2024. In the same period up to May this year, prices in society have risen by 30 per cent, according to Statistics Norway. This means that the real purchasing power of Jørstad has fallen every year. Adjusted for the rise in prices, the payments have been around NOK 30,000 lower than what the rise in prices would have meant, according to Jørstad. Although Jørstad has worked for several years as an investment adviser in a bank, he still struggled to understand how free policies work. Photo: Anders Eidesvik / news – Scandalous Both Finans Noreg and the Pensioners’ Association claim that the independent policyholders lose purchasing power every year because future payments do not keep pace with wage and price growth in society. – I try to be careful with such strong words, but I also use that word. It is scandalous, says Thorstein Øverland in the Pensioners’ Association. He has worked with freelancers for a long time, and the union has been critical of the scheme with a guaranteed return. Chief economist Sindre Farstad and consultant Thorstein Øverland (th) in the Pensioners’ Association are not satisfied with the current system. Photo: Johan B. Sættem / news – Too few shares Øverland believes that politicians must change the rules for the management of life companies so that they can take greater risks in management. This should ensure that the savings receive such a return that future payments keep pace with wage and price growth in society. – The pension capital is managed with far too few shares. The proportion of shares in the portfolio is regularly below 10 per cent. The Pensioners’ Association believes that a model should be adopted that is more similar to the pension funds, where the share share is often between 40-50 per cent. In addition, he believes it is a problem that parts of the surplus from the pension capital end up in the insurance company’s buffer fund. – That buffer fund is not actually paid out to the customers while the customer is alive, says Øverland. The Ministry of Finance has not had the opportunity to be interviewed in the case, and points out that a government-appointed working group is working to submit proposals for changes to the regulations. The report was originally supposed to be delivered in May, but has now been postponed until over the summer. Move the pension over to shares After examining the rules surrounding free policies, Jørstad chose to switch to a so-called free policy with investment choice. To do this, he had to give up the guarantee of a guaranteed return, in exchange for risk and the opportunity to invest in index funds and shares. Morten Jørstad would rather bet on the stock market than the free policy guarantee. Photo: Anders Eidesvik / news He was strongly warned against renouncing the bank’s guarantee, which is in line with the regulations for good financial advice. The logic is that the payouts from the free policy are money you have to live on as a pensioner. In that case, one should not take too high a risk in the first place. From time to time the stock markets fell sharply within a short time, and then the monthly payments will also fall accordingly if you have invested the free policy in risky shares. But it is still up to each individual whether they want to follow the advice of pension advisers or not. – You’re not afraid to waste your money at the stock exchange casino? – No. I haven’t been anxious about that at all. I have followed the stock market for so many years and I know that things fluctuate, Jørstad answers before adding: – But in general, when you look at the development of the stock market, it is always on the upswing. It’s part of our capitalist society, so that’s how it is. Published 01.07.2024, at 07.17
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– Free policy with guaranteed interest I would call robbery – news Norway – Overview of news from different parts of the country
