The government will take NOK 11.7 billion from the Norwegian State Pension Fund into the national budget to cover the loss of the extraordinary employers’ contribution.
– If the government had not had this or a similar opportunity, then Vedum would have had to save the money elsewhere in the budget, says NHO’s chief economist Øystein Dørum to NTB
In the proposal for the state budget that the government presented on Monday, it is stated that a rule for annual withdrawals of 3 percent from the Norwegian State Pension Fund (SPN) will be introduced to solve the challenge with the fund’s high holdings on Oslo Børs.
The introduction of the new rule has been under investigation for four years.
– Such a withdrawal rule will both solve the ownership challenge and add NOK ten billion in “fresh money” to an already overburdened 2025 budget, Dørum wrote in an article in Today’s Business when the proposal was on the table this spring.
12 billion away
The arrival of the “fresh money” coincides well with the disappearance of another major source of income for the government in the national budget.
Under the finance speech In the Storting, Finance Minister Trygve Slagsvold Vedum (Sp) emphasized that the government’s proposal for the state budget will reduce the tax burden by NOK 17.5 billion if the proposal is adopted.
Of this, the abolition of the additional employer contribution of 5 per cent for everyone with an income over NOK 850,000 from 1 January next year amounts to NOK 12 billion.
The extra tax on the country’s business community caused irritation when it was introduced in 2022. But with arguments about slowing down the use of oil money so as not to affect price growth and the labor market, while at the same time it had to provide support for galloping electricity prices and aid to Ukraine, the government was pressured to collect bring in more money from other sources.
Vedum also promised that the measure would be temporary.
460 billion – not enough
The oil-corrected deficit in the budget proposal for 2025 is stated at NOK 460 billion. This is money with which the mainland economy actually runs a deficit, but which the state covers by extracting 2.5 per cent of the yield in the oil fund.
This year’s withdrawal is well below the action rule’s limit of 3 per cent, but nevertheless the proportion of oil money now amounts to almost 25 per cent of the state budget in Norway.
But all the billions were certainly not enough for Vedum when the solitaire for 2025 was to be added. Then it was a good fit with an overgrown state fund that was about to break the imposed restrictions. If the 11.7 billion had been taken out of the oil fund, the government would have taken about 2.6 per cent of the return.
FRP reacts
The proposal elicited a reaction from the Progress Party’s leader Sylvi Listhaug after the budget was presented. She says the party was almost ridiculed when they proposed the same thing two years ago.
– In the FRP, we are well used to Støre coming after us, but this really takes the cake. Just two years ago, the Labor Party believed that it was frivolous, irresponsible and almost a threat to people’s pension savings that the FRP wanted a one-off withdrawal from the Folketrygdfondet to give people more to root for in what was a demanding economic period, she stated to VG.
– Now the Labor Party is proposing the same, but without it giving ordinary people more than 1 kroner extra in tax relief per day, says Listhaug, referring to the government’s overall tax relief throughout the government period.
Less government savings
It is the Norwegian National Insurance Fund that manages the fund, which now the government, for the first time in 45 years, wants to stick its straw into and extract NOK 11.7 billion.
– The election is not unproblematic. When the Folketrygdfondet’s capital is added to the Oil Fund’s, albeit not in name, ten billion kroner is moved from savings to consumption. The state’s overall savings are being reduced, Dørum wrote in April.
Measured against big brother the Norwegian State Pension Fund – the Oil Fund, at almost NOK 19,000 billion, the Norwegian State Pension Fund (SPN) is almost a gnat with its capital of NOK 379 billion after the first half of this year. But in the Nordic region, where the fund operates, it has become too large to only engage in passive investments in the listed companies.
Standing untouched
Folketrygdfondet was established in 1967 to manage the surpluses in the national insurance – i.e. the difference between what was paid into social security contributions and what was paid out.
During the first twelve years, NOK 11.8 billion was transferred to the fund. Social security benefits increased throughout the 1970s, and since 1979 there has been no surplus to be deposited into the fund, the fund itself writes. Apart from one withdrawal of approximately NOK 100 billion when the government’s overdraft scheme was discontinued in 2006, there have also been no withdrawals from the fund.
Today, Folketrygdfondet’s state capital management is not linked to national insurance.
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