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Glossary - Key Terms

Contact Us - Secondary Pensions

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Actuary

Someone who compiles and analyses statistics and uses them to calculate insurance risks and premiums. Any actuary who provides information about your scheme so you comply with the Law must be a Fellow of the Institute and Faculty of Actuaries


Approbated pension scheme

Is a scheme that meets the government standards as set out in the Secondary Pensions (Guernsey and Alderney) Law, 2022, as amended


Additional voluntary contributions

Additional contributions an employee may decide to make to the pension scheme. Also known as AVC


Automatic enrolment    

When a designated employee is enrolled by an employer into a pension scheme that meets the government standards, so they comply with the Law


AVC

Additional Voluntary Contributions


Contract of employment

A contract of employment is a legally binding agreement made between an employer and employee when a job applicant accepts an offer of employment and is set out in the Conditions of Employment (Guernsey) Law, 1985, as amended


Deferred enrolment    

When an employer enrols a designated employee or employee into a pension scheme but delays the date they join the scheme by up to 3 months


Defined benefit

A scheme where the employee contributions and employer contributions are used to provide you with a certain amount of pension. Sometimes these will be referred to as a DB scheme


Defined contribution

A scheme where the employee contributions and employer contributions, and any additional voluntary contributions that have been made are invested and when you retire, the value of this pension pot is paid to you as a pension. Sometimes these will be referred to as a DC scheme


Designated employee

An employee who is employed by an employer and meets the eligibility criteria as set out in the Law


Director    

The Director of Revenue Service as referred to in section 205 of the Income Tax (Guernsey) Law, 1975, as amended


Earnings

The gross salary (ie pay before any deductions) received by an employee, this includes commission, bonuses, overtime payments and other such remuneration

 
Eligibility criteria

The criteria set out in the Law which determines whether an employee is a designated employee who should be automatically enrolled into a pension scheme


Employee    

An employee is an individual who has entered into or who works under a contract of employment


Employee Contributions    

A contribution payable to the scheme by a designated employee which must meet the minimum contributions set out in the Law and be deducted from their pay by their employer or a contribution paid to the scheme by an employee


Employer    

A person or company who employs an individual


Employer contributions    

A contribution payable to the scheme by an employer in relation to a designated employee which must meet the minimum contributions set out in the Law, or a contribution paid by an employer in relation to an employee, on a voluntary basis, and at a rate of the employer's choosing


Enrol    

When a designated employee or employee joins a pension scheme set up by an employer so they comply with the Law


Law    

The Secondary Pensions (Guernsey and Alderney) Law, 2022, as amended


Lower earnings limit    

This is the level used by Social Security to decide when an employed person and their employer become liable for the payment of social security contributions. For more infomation on social security contributions and limits please visit our Social Security contributions page.

 
Minimum contributions    

These are the minimum contributions that must be paid by an employer and designated employee to comply with the Law. The contributions are set out in the Law and the employer must pay at least their minimum rate of contribution. The employer and designated employee or employee can pay contributions that are above the minimum rate if they wish


Notice    

This will be a Notice of Deferred Enrolment, Notice of Immediate Enrolment, or Notice of Automatic Re-Enrolment, as applicable


Notice of Automatic Re-Enrolment    

A form providing details of the pension scheme when contributions are going to be deducted from a designated employee's salary after they have previously opted out of the pension scheme. Employers are legally required to give these to the designated employee to complete


Notice of Deferred Enrolment    

A form providing details of the pension scheme when a designated employee's enrolment to the scheme is being deferred by the employer. Employers are legally required to give these to the designated employee to complete


Notice of Immediate Enrolment    

A form providing details of the pension scheme when contributions are going to be deducted immediately from a designated employee's salary. Employers are legally required to give to these to the designated employee to complete


Normal Retirement Age    

The age at which the State Pension can be paid, in accordance with the Social Insurance (Guernsey) Law, 1978, as amended


Normal Retirement Date    

The date at which the State Pension can be paid, in accordance with the Social Insurance (Guernsey) Law. 1978, as amended


Operative Date    

This is the date an employer needs to comply with the Law. This is a deadline for completing all the tasks associated with setting up the pension scheme and enrolling designated employees. Employers must engage with pension providers well in advance of their operative date


Pension provider    

Is a private provider that an employer engages with to set up a pension arrangement, so they comply with the Law


Re-Enrolment    

When an employer enrols a designated employee back into the pension scheme after they have previously opted out. Re-enrolment happens on the 3 year anniversary of a designated employee opting out of the scheme


Returns Creator    

Is an IT product provided by the States of Guernsey for Employers or their payroll providers to use to submit their employers return


Revenue Service    

Is a service area within the States of Guernsey responsible for ensuring employers comply with their legal obligation under the Secondary Pensions Law


State Pension    

The pension that is funded through Social Security contributions and is payable by the States of Guernsey as described in, and in accordance with the Social Insurance (Guernsey) Law. 1978, as amended


State Pension Age    

The age at which the State Pension can be paid, in accordance with the Social Insurance (Guernsey) Law, 1978, as amended


Upper earnings limit    

This is the level used by Social Security to decide when an employed person and their employer are no longer liable for the payment of  social security contributions. For more infomation on social security contributions and limits please visit our Social Security contributions page.


Voluntary Employee

A person employed by an employer who is not a designated employee but is aged between 16 and 74 years and requests to join the employer's pension scheme


Your Island Pension (YIP)    

Your Island Pension (YIP) is an independently governed pension scheme set up by the States of Guernsey and administered by a pension provider

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