The reform is intended to ensure fair and economically sustainable benefits while encouraging older workers to stay on the job longer.
The new system will count all income toward pension levels. This aims to improve retirement benefits for many, especially women, who work part time.
The system will also allow pensioners who work after retirement age to earn income without it reducing their pension payments.
Norway is the world's third-largest oil exporter, after Saudi Arabia and Russia, and sets aside surplus wealth in what is now Europe's largest pension fund.
Despite the nearly €220 billion in the fund, the Organization for Economic Cooperation and Development and others have warned the current system's costs cannot be sustained as life expectancy increases and more workers choose early retirement.