In a piece for Next Avenue, Chris Farrell writes that the U.S. can learn a lot from Norway with respect to retirement.

In the U.S. about half of corporate employees lack access to an employer-sponsored retirement plant, but in Norway — “as well as Sweden, Denmark, Germany and the rest of the major industrial nations,” Farrell writes — public- and private-sector workers are covered by some kind of pension.

Norway has a government-provided retirement pension along the lines of Social Security. But in 2011, the country did something pretty clever that went beyond it. Norway overhauled its private-sector pension system known as AFP to encourage older Norwegians to stay employed.

Before 2011, workers in Norway could retire between age 62 and 67 and the size of their AFP pension benefits depended on their employment earnings (means testing). There was no financial reward to postpone receiving the benefits until age 67, and, Farrell writes, it was no surprise that most workers started taking their pensions around age 62.

Starting in 2011, however, the AFP pension benefit was no longer means-tested based on employment earnings, so Norwegians wouldn’t be penalized if they wanted to keep working while earning retirement benefits. And the size of the pension now grows each year a worker delays filing to claim it, until age 75.

So what was the result of these reforms? The percentage of AFP-eligible workers who claimed benefits at 62 rose from 30% to 50%, but the fraction who continued working after claiming at 62 shot up by about 13%.

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