Information and public services for the Island of Guernsey



Secondary Pension Scheme - Pre-qualification process
Tuesday 22 August 2017

The Committee for Employment and Social Security is pleased to publish an invitation for suppliers to participate in the second step of the procurement process for a Second Pillar Pension Scheme for Guernsey and Alderney.

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Fall in Antibiotic Use
Monday 21 August 2017

Fewer islanders are being prescribed antibiotics in the community in Guernsey and Alderney.

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States to livestream public meeting on L'Ancresse East proposals
Friday 18 August 2017

A second public presentation on the proposed managed realignment of the coast at L'Ancresse is being held at 7.30pm on Tuesday 22nd August.

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Income Tax on pensions

Contact Us - Income Tax

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Below is a Summary of the main features of a pension and how they relate to Taxation.

  • Contributions or premiums

    • Members no longer need to request a certificate of unused contribution.
    • A member may contribute any amount they wish without approval from the Guernsey Income Tax Office.
    • Tax relief will be limited to the lower of 100% of taxable income or £50,000 (please refer to Statement of Practice M48 (under "Practitioners and technical information") for further explanation of the retirement annuity allowance for married couples).  This limit applies to the overall contributions or premiums made to all Approved Schemes (Retirement Annuity Trust Schemes ("RATS") and Retirement Annuity Contracts ("RACs") and Approved Occupational Pension Schemes.
    • There are no longer any relevant earnings and the 15% / 25% limits no longer apply.
    • If the member has made a contribution but does not take full advantage of tax relief available on their contributions or premiums in any year, they may carry this unused relief forward for up to 6 years (starting from 2011) subject to certain limitations.
  • Contributions by employer(s)

    • Employer(s) contributions to RACs or RATS are neither taxable as a benefit, nor claimable by the employee(s).
  • Benefits

    • The member may take the benefits from the pension between the ages of 50 and 75 but cannot defer them beyond 75 commencement; earlier than age 50 may be allowed if due to incapacity or agreed by the Director of Income Tax.
    • The member may take a tax-free lump sum of up to 30% of the fund value up to the specific limit (for 2017 this limit is £188,000).  Tax is due if the sum taken is more than £188,000.
  • Triviality

    • Where the Fund Value is trivial in amount, or the fund Value in respect of a spouse's, child's or dependant's pension is trivial in amount, or retirement is due to serious ill health, the entire fund value may be paid as a lump sum. 
    • It is permissible to commute a fund value which is trivial in amount at any age.  The full amount of the trivial commutation is taxable at the standard rate (currently 20%) if commutation occurs before age 50 and at half the standard rate if commutation occurs on or after age 50.  However, the trivial commutation of a spouse's, child's or dependant's pension on the death of a member is taxable at the standard rate regardless of age. 
    • It is not necessary to seek prior approval from the Director before commuting a fund value which is less than £15,000.  However, before commuting a fund value of greater than £15,000, Trustees should:
      • obtain a declaration from the individual confirming that the fund value may be deemed trivial in amount (i.e. the individual is age 50 or over and the aggregate of the individual's fund values (including any previous trivial commutations, taken at face value) from all approved occupational pension schemes and approved schemes does not exceed £30,000); and
      • seek clearance from the Director.
    • Tax should be remitted to the Director within 30 days of the commutation being paid - follow this link for details on how to make payments of income tax. 
  • Fund value

    • The term used to define how much is held within the pension and will be the gross amount (i.e. value of the pension before any money is paid out).
    • If a member has a pension with a fund value up to £15,000 commutation on grounds of  triviality may be made without approval from the Guernsey Income Tax Office and without taking into account any other pension(s).  If the member is under 50, tax would be charged at the standard rate of 20%.  If the member is over 50, the tax charge would be 10% (half the standard rate).
    • If the member is 50 or over and the fund value on that pension is between £15,000 - £30,000, the Guernsey Tax Office requires the gross fund value of all pensions held, and will review and determine whether the payment can be allowed under triviality.  If the total (gross) fund value of all the pensions exceeds £30,000, triviality will not be allowed, unless due to serious ill health.
  • Flexibility

    • Changes to permit greater flexibility for funds derived from overseas inward transfers were approved at the States meeting held on 29 September 2015 (you can view the relevant Ordinance here), to be effective from 2 October 2015, and Trustees/Administrators should be aware that these changes supersede any restrictions contained in their original approval letters. Scheme members should contact their Trustees/Administrators, in the first instance, to discuss the options open to them. Follow this link for a note prepared by Babbe on how the proposed changes may affect you.
  • Printable forms

  • Document downloads




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