Norwegian Life - Norway - page 956

Although the marginal income tax rate is 28%, in practical terms this becomes around 36% for middle-in-
come earners and 47.8% for high-income earners.
These new realities, most of which are protected under the welfare system, have begun
a perceptible shift away from the traditional nuclear family, which has always provided
the bedrock of Norwegian society. Partly this change is because of the greater choice that
rising Norwegian incomes (US$58,809 per capita in 2009, the fifth highest in the world)
have enabled, and partly because of a decline in churchgoing among the young. Perhaps
the most noticeable impact has been not upon immediate family units - which have diver-
sified rather than been replaced, and the double-income-two-kids model remains the norm
-butontraditional,extendedfamilieswherebytherequirementtocareforelderlyrelatives
seems to have transferred from family members to the state.
Norway has an ageing population, an official retirement age of 67, pensions guaranteed
for the remainder of a person's life and an average life expectancy nudging 80 years. It
does, however, have an advantage over other countries wondering how they'll meet their
pension obligations as the pool of taxpayers shrinks: the Government Pension Fund.
SAVING FOR A RAINY DAY
Most countries with significant oil reserves look with concern towards the day when
the oil runs out. Not so Norway.
Suddenly flush with oil money in the 1970s, Norway's government began by de-
veloping the country's infrastructure, after which the profits were used to pay off the
country's debt, an aim achieved in 1995. Thus it was that in 1996, the government
established the Norwegian Petroleum Fund. The aim? To safeguard the wellbeing of
future generations of Norwegians, more specifically by putting aside enough money
to pay for the health and pension costs of Norway's ageing population. The reserve
fund, whose name was changed in 2006 to the Government Pension Fund, is now the
largest public fund in Europe with a value of over US$449 billion. Some estimates
suggest that the fund will swell to US$765 billion by 2014.
But this is not just any investment fund. For a start, the fund's managers may only
invest outside Norway, a measure designed to avoid overheating the local economy.
As such Norway has become one of the largest investors in the world. 'We basically
own a slice of the world,' was how Henrik Syse, head of the fund's corporate gov-
ernance department at Norwegian central bank, described it to the International Her-
ald Tribune (IHT) in 2007.