Pension for the self-employed – what are your options?
You can build pension from three sources, and they do not exclude one another: the National Insurance scheme, which builds on salary or personal income and not on dividends; a voluntary defined contribution pension of up to 7% of relevant income up to 12 G; and an IPS account, capped at NOK 25,000 from 2026. A dividend from your own company builds no pension entitlement at all – that is the most important difference between salary and dividends over time.
The National Insurance scheme
For people born in 1963 or later, 18.1% of pensionable income up to 7.1 times the average G goes into the pension balance. A dividend from your own AS is not pensionable income. Salary from your own AS, or personal income from a sole proprietorship, does build entitlement. An owner who has taken everything as a dividend for ten years to save employer's contributions has built nothing in the National Insurance scheme in those ten years. See Salary or dividend from your own company
Voluntary defined contribution pension
Sole traders, personal partners in partnerships and owner-employees of their own AS can, on certain conditions, set up a voluntary defined contribution pension. The contribution can be up to 7% of relevant income up to 12 G. The old lower limit of 1 G was removed in 2023, so the scheme has become relevant to far more people than before. For a sole proprietorship the contribution reduces both general income and calculated personal income. The tax value can therefore consist of 22% tax on general income, national insurance contributions on business income and any bracket tax. For an owner-employee of an AS the company gets a deduction for the pension cost, while the contribution is not taxed as salary for the owner. The company pays employer's contributions on the pension contribution.
An ordinary occupational scheme can have higher ceilings
Where the company is already required to have an occupational pension, an ordinary defined contribution plan can have contributions of up to 7% of salary up to 12 G, and in addition up to 18.1% of salary between 7.1 G and 12 G. Those are maximum limits, not minimum requirements. The minimum is 2% – see Mandatory occupational pension
IPS: the limit is NOK 25,000 from 2026
From the 2026 income year the maximum deductible contribution to the tax-favoured individual pension savings scheme is NOK 25,000 a year. The deduction is against general income. At 22% tax, a full contribution gives a tax reduction of NOK 5,500. IPS capital is exempt from wealth tax, is not taxed currently on its return, is taxed as general income on payout, and is locked until pension age. That last point is a real cost. IPS also has to be kept apart from an occupational pension, which is taxed as pension income on payout – the tax treatment is not the same.
Be careful with the «tax arbitrage» calculation
It is tempting to say you save 45% tax now and pay 22% later. For an occupational pension that is too simple. Future tax depends on the total pension, other income and the rules in force when the money is actually paid out – 20 to 30 years ahead. The gain is real, but it is smaller and less certain than the calculation suggests.
Should an AS owner always take salary up to 7.1 G?
No. 7.1 G matters for maximum accrual in the National Insurance scheme, but it is not a universal optimal withdrawal level. The choice is also affected by other employment income, employer's contributions, the marginal rate, the NAV basis you want, the company's liquidity and how much capital you are willing to lock up until pension age. For many, a combination of the National Insurance scheme, pension saving and free saving or a share savings account is more flexible than tying everything up in pension products. Greenleaf can calculate the maximum voluntary contribution, the tax effect for a sole proprietorship or an AS, and how salary, dividends and pension contributions work together.
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This is general guidance, not advice on your specific case. Deadlines, rates and amounts change – always check the current rules, or get in touch with us.
More on owner pay, dividends and benefits
- Salary or dividend from your own company – which pays better?
- Dividends from your own AS – which rules and deadlines apply?
- A loan from your own AS – why is a «loan» taxed as a dividend?
- Company car or private car – which pays better?
- A home office – what can you actually deduct?
- Mandatory occupational pension – when does a business have to have one?
- Benefits in kind – what is taxable?
- Directors' fees – can they be invoiced from your own company?
- A share savings account or a holding company – which suits you?
- The shielding deduction – what is it, and why should you use it?
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