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Secondary Pensions: detailed proposals for the introduction of automatic enrolment into private pensions and the establishment of "Your Island Pension"

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Committee for Employment & Social Security - P.2019/147

The States are asked to decide:

Whether, after consideration of the policy letter entitled 'Secondary Pensions: detailed proposals for the introduction of automatic enrolment into private pensions and the establishment of "Your Island Pension"', dated 27th December 2019, they are of the opinion:

1. That a duty should be imposed in legislation on employers to ensure that eligible employees are automatically enrolled in a qualifying pension scheme ("the auto-enrolment duty"), as described in section 1, into which employers and employees shall be required to make defined minimum contributions.

2. That the imposition of the auto-enrolment duty on an employer should be phased in by reference to the number of employees that are employed by that employer, as described in Appendix A.

3. That the defined minimum contributions of employers and employees into a qualifying pension scheme should be increased over seven years from introduction, as described in Table 1 in section 4.

4. That exemptions to the auto-enrolment duty and the attendant duty to make defined minimum contributions should be specified in legislation, as described in section 8.

5. That the sharing of relevant data between the Revenue Service and other government and regulatory bodies and agencies should be permitted through legislation for the purpose of monitoring and enforcing employers' compliance with the auto-enrolment duty and the payment of minimum contributions, as described in section 17.

6. That a pension scheme ("the Scheme") should be established as described in section 3, and that further to this:

a. a statutory corporation should be established to act as the Trustee of the Scheme;

b. the rules governing the scheme and the operation of the Trustee should be publically available, and established and amendable by the Committee for Employment & Social Security;

c. the governing board of the Trustee should be appointed by the States of Guernsey on the recommendation of the Committee for Employment & Social Security;

d. the Policy & Resources Committee should make available on demand, a loan facility in favour of the Trustee, on such terms as the Policy & Resources Committee may agree, for the purpose of providing financial support to the Trustee until such time that it becomes financially independent;

e. any necessary minor legislative changes are made to ensure that the Trustee and the Scheme may be licensed by the Guernsey Financial Services Commission as appropriate, and are subject to the same regulatory requirements (subject to any necessary modifications) as other comparable pension providers.

7. That Smart Pension Ltd, or a subsidiary of Smart Pension Ltd, should be appointed to deliver administrative and custodianship services to the Scheme, as described in section 14, and in furtherance of this:

a. the Committee for Employment & Social Security should have authority to contract with Smart Pension Ltd to develop these services until such time as the Trustee is established and can assume responsibility for the delivery of administration services, and

b. to direct the Policy & Resources Committee to make available on demand a loan facility of £800,000 in favour of Smart Pension Ltd, on such terms as the Policy & Resources Committee may agree with Smart Pension Ltd, for the purpose of establishing the scheme.

8. To direct the Committee forEmployment & Social Security to report back to the States within six months with proposals for enforcing employers' compliance with the auto-enrolment duty and the payment of minimum contributions, as described in section 17.

9. To direct the Committee for Employment & Social Security, after consultation with the Revenue Service and the Trustee, to report back to the States by 2025 with an update on the introduction of these proposals, and proposals for the introduction of an auto-enrolment system for self-employed and non-employed people.

10. To direct the Policy & Resources Committee to investigate the best way for the States of Guernsey to fulfil its obligations as an employer under these rules, and make any changes to the public sector pension scheme it deems necessary, following consultation with the members of that scheme, to comply with the proposed legislation.

11. To direct the Policy & Resources Committee to consider the impact of the auto-enrolment duty when preparing the budget for 2021 onwards.

12. To direct the preparation of such legislation as is necessary to give effect to these propositions.

The above propositions have been submitted to Her Majesty's Procureur for advice on any legal or constitutional implications in accordance with Rule 4(1) of the Rules of Procedure of the States of Deliberation and their Committees.

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Secondary pensions detailed proposals for the introduction of automatic enrolment into private pensions and the establishment of 'Your Island Pension'

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