Secondary pension scheme is approved

Your Island Pension – Yip – will see all employers having to provide a workplace scheme.

Those who already offer a scheme can continue to do so as long as it meets criteria set by Employment and Social Security.

ESS president Michelle Le Clerc said it was estimated that there were more than 25,000 workers in Guernsey who currently do not have a workplace pension, and are instead relying on the States pension.

If an employer does not have a scheme that qualifies under the ESS system, a default scheme will be provided and operated by Smart Pension Ltd and would thus be run ‘at arm’s length’ from the States, said Deputy Le Clerc.

Deputy Lester Queripel was concerned about the likelihood of the costs to employers being passed on to consumers.

He had other concerns, too, such as what would happen to the money in the scheme when a contributor died.

Deputy Le Clerc later said that the money in the scheme was part of an individual’s estate, so when they died it would be dealt with in accordance with their wishes.

Deputy Peter Roffey said that ESS had addressed many financial concerns in its report, making it clear that there would be short-term pain in order to achieve the long-term gain. ‘We have to be forward looking and long-sighted,’ he said.

Deputy Neil Inder was worried about the estimated loss to the economy of some £30m., or 1% of GDP, assuming full take-up of the scheme. It would lead to about 30% being taken out of an employee’s salary, including Social Insurance, tax and payments to this new scheme.

If people wanted a secondary pension, they were already able to obtain one, said Deputy David De Lisle. He called on Policy & Resources to ‘consider very carefully’ taking money out of the economy at this time.

ESS vice-president Shane Langlois said that another policy letter would be coming back from the committee in about six months’ time with more detail about how the scheme would work.

Deputy Mary Lowe’s worry was that the very people who this scheme was set to help would not be able to afford to be in it.

P&R president Gavin St Pier said that there was never a perfect time to be doing something like this.

There were short-term economic challenges but this should be seen as a multi-generational, multi-decade, project: ‘There are some challenges around this, but it’s the right thing to do,’ he said.

The propositions were put to the vote and approved by 32 votes to seven.