This Law ensures, subject to certain conditions, the following:
Your employer must provide a pension scheme that meets the legal requirements
- Provided you meet the Eligibility Criteria, as defined on the Employee Guidance page, and your employer hasn't already provided you with a pension scheme, they will need to provide one that you can join. They can do this by working with a private Pension Provider and setting up a pension scheme with them. If they don't set up a scheme directly with a Pension Provider, they will need to register with Your Island Pension (YIP) which is a scheme the States of Guernsey has set up with the Sovereign Pension Services (CI) Limited. YIP is separate from any other States of Guernsey function, so it is completely independent from, and not linked in any way to the State Pension.
- Your Contract of Employment may specify the pension scheme you need to join and that it is compulsory. If it isn't compulsory, you have a limited period to decide whether you want to use your employer's scheme or YIP. You will do this by completing the Notice of Immediate Enrolment form, which will also provide you with a deadline for completion. Your employer will provide this form to you.
- If your Contract of Employment tells you that the pension scheme your employer has set up is compulsory there is nothing for you to do; you must be in their pension scheme, and you will not be able to opt out.
- If you already have a personal pension that you are paying into and it meets the legal requirements (officially known as an Approbated Pension Scheme), you can ask your employer to contribute to this instead. It is up to your employer whether they decide to use the pension scheme that you are already paying into, or one that they have set up on your behalf. If they agree to use your pension scheme your Pension Provider will be able to provide you with documents to show that it meets the legal requirements and give you information on what you and your employer need to do.
Your employer must Automatically Enrol you into the scheme if you are a Designated Employee and enrol you back in every three years if you opt out
- If you are a Designated Employee, your employer must enrol you into the pension scheme. On or before your first day of employment, you will be given a Notice of Immediate Enrolment or Notice of Deferred Enrolment to review and complete. The Notice will tell you the pension scheme your employer is going to place you in, and the secondary pension contributions that will be deducted. You will be given a deadline for completing this form and returning it to your employer.
- You may be able to opt out at any stage, but this will depend on what your Contract of Employment says. If your employer has made membership of the pension scheme mandatory/compulsory within your Contract of Employment your employer will not provide you with a Notice, you won't be able to opt out, and you will have to pay into the pension scheme your employer has set up.
- If you can opt out, you should think carefully about whether this is the best thing for you to do, a lot of people underestimate how much they need to save for retirement. Also, when you pay into your pension, your employer must pay into it too therefore if you decide to opt out, you will not get the benefit of your employer's contribution. Before you decide to opt out of the scheme, you might want to consider the amount of money you will need to live on in retirement, and how much difference an extra few years of secondary pension contributions can make to the pension you receive when you retire. If you decide to opt out of the scheme, you will need to write to your employer to make this change and that letter will need to be kept by them for 7 years. Secondary pensions aim to encourage people of working age to save more for their retirement so that they won't have to rely solely on the State Pension and tax-funded welfare benefits later in life.
- Every 3 years, on the anniversary of you opting out, your employer will be required to enrol you back into the pension scheme. They will have 3 months to enrol you back in so they may decide to do this at the same time as your co-workers rather than on the actual anniversary.
- If you opt out of the scheme you might not get your secondary pension contributions refunded. If you opt out within 6 weeks from the date of enrolment, they will be refunded to you and your employer. If you opt out after 6 weeks, they will remain invested in your pension pot unless you decide to transfer the benefits to another pension provider before they are paid.
Your employer must pay at least a minimum level of secondary pension contributions if you remain in the pension scheme
- The Employee Contributions you pay will depend on the pension your employer has set up. The minimum secondary pension contributions that need to be made are a percentage of your Earnings so if your pay goes up, you will pay more into your pension pot. The secondary pension contributions will usually be made up of Employer Contributions and Employee Contributions. Your employer can choose to pay the full amount of the secondary pension contributions, in which case you would have nothing deducted from your pay. However, they cannot ask you to pay in more to cover their contribution as well as paying your own. Further information on this can be found on the How much do we need to pay? (Designated Employee) page.
Your employer cannot prevent you from joining the scheme or encourage you to opt out of it once you are in
- As a Designated Employee your employer cannot ask you to leave the scheme whilst you are working for them, and they aren't allowed to offer you any incentives to leave it either. For example, they can't offer you more pay or any other rewards if you leave the scheme.
- It is not acceptable to dismiss someone for refusing to opt out of the scheme, we hope employers will not try to use the membership or potential membership of a secondary pension scheme as a reason not to employ someone. The States of Guernsey will review and consider whether any enforcement measures are needed if recruitment decisions are made based on the membership of a pension scheme.
Your employer can postpone your enrolment into the pension scheme for a maximum of 3 months
- Your employer may tell you that they are postponing the date on which they will enrol you into the scheme and they are allowed to do this for a maximum of 3 months. There are several reasons why they might want to do this. For example, if you have a probationary period, and they want to wait to make secondary pension contributions until you have reached some objectives or milestones in your role.
- If your employer postpones enrolling you into the scheme, they must provide you with a Notice of Deferred Enrolment at least 7 days before their Operative Date, or when you commence employment. This is an official document, and they are required to give this to you by Law. This could be referred to in your Contract of Employment or a welcome letter so you both have a record that it has been given to you. The Notice will give you warning that you will be enrolled into a scheme and deductions will be made from your pay. It will include a section to confirm whether you want to use your employer's scheme, or Your Island Pension (YIP). If your employer has allowed you to use your own scheme, you would put the details of that one on the form instead. Your employer won't be able to extend this period so once you have reached 3 months employment with them your enrolment into the scheme must start immediately. If you do not return your completed Notice to your employer before the deadline, they are required to enrol you into their pension scheme.
- Your employer is not allowed to issue you with lots of short-term contracts that defer, or prevent you joining the pension scheme, even if they issue the contracts using different company names. If you are concerned that this is happening, you should report the employer to the Revenue Service. Visit the Employment and Equal Opportunities Service website for further information if you have concerns regarding your Contract of Employment.