In February 2020, the States approved proposals for the establishment of a secondary pension policy. The proposals will create a requirement for occupational pensions to be offered to most employed people and it is intended that the proposals will be phased in from 2023.
It is estimated that approximately 60% of the working age population, currently around 25,000 people, are not making any personal pension provision. The proposed Secondary Pension scheme aims to encourage people of working age to save more for their retirement so that they won't have to rely solely on the States old age pension and tax-funded welfare benefits later in life.
The then Social Security Department reported to the States of Deliberation in 2016 on proposals for the implementation of a new system of automatic enrolment into private pension saving for working age residents of Guernsey and Alderney. The report received strong support within the States and private sector employers who were consulted during the development of the report. The States approved the principles for the introduction of a Secondary Pension Scheme, subject to further research and an economic impact assessment of the proposals.
A detailed set of proposals for the scheme's design and implementation were brought to the States and approved in February 2020.
Once implemented, employers will usually have a legal duty to enrol their employees automatically into the new secondary pension scheme, or into another qualifying scheme. However, it is not compulsory for individuals and one can opt out of the scheme. The intention, and the experience from elsewhere, is that most people who have been enrolled into the pension scheme will stay in. If one does chose to opt-out, employers will be required to re-enrol them into the pension scheme every three years - it may be that circumstances have changed and the employee may now want to remain in the scheme at that time, but they can choose to opt-out again. There will be no requirement for self-employed and non-employed individuals to be enrolled onto the scheme, but they will be able to contribute voluntarily.
Employers will be required to contribute at least minimum levels into either a qualifying pension scheme or into the new secondary pension scheme following automatic enrolment of their employees. Employers would not have an obligation to make contributions for individuals who have opted out of the new scheme. If employers already contribute to a qualifying pension scheme for their employees then they will not have to contribute to the new secondary pension scheme as well, although they would be able to switch if they wished to do so.
A set of frequently asked questions has been created in order to address questions which have been raised by members of the public and employers throughout the process so far. These can be found in the downloads section of this page. If you have any questions that are not addressed in this document, please contact the Secondary Pensions Project Manager using the contact button on this page.