‘Rushed’ secondary pension rules in place from July
Employees will be automatically enrolled into an approved pension scheme in two weeks to help avoid pensioner poverty. But despite delays in getting through the States, experts have warned that the process has ended up rushed.
From 1 July, employers with 26 or more employees will be required to offer the opportunity for their staff to save for retirement, so they are not solely reliant on the States pension and tax-funded welfare benefits.
‘The process ended up being rushed, the secondary pension rules weren’t signed off by the States of Guernsey until December 2023 and the larger employers have to be up and running by July,’ said Damian Wallen, senior consultant at Rossborough and secretary of the Guernsey Association of Pension Providers.
‘Some additional clarification came about in March and so it’s been a bit more rushed than the industry would have preferred.
‘The biggest headache is actually for companies that already had pension schemes needing to change their rules and regulations to ensure that everything complies with the new laws.
‘We fully back the concept which will benefit islanders over future years and we look forward to working with current and future employers to ensure the smooth transition into a secondary pension era.’
Most employees aged between 16 and pension age are eligible for automatic enrolment and it is estimated that some 65% of the employed working age population are not making any personal pension provision.
‘We are very much looking forward to the launch of secondary pensions on 1 July, when the larger employers in Guernsey will be subject to the new requirements,’ said Stephen Ainsworth, president of Gapp.
‘Preparations have been well under way for some months, but there has been a real increase in activity over the past couple of months as employers have come to realise that there are major documentation changes, system changes and employee communications to be completed in a very short period of time, since the final requirements of the secondary pensions regime were published later than planned, and some details were only recently released.
‘We are already seeing a last-minute rush and we are expecting this to intensify over the next few weeks.’
To ensure that everyone will have access to an affordable pension scheme, the States has facilitated the establishment of the Your Island Pension scheme, which is separate from other States functions.
‘I am confident that, even though the benefits of this legislation will take their time to bear fruit, secondary pensions will end up being one of the most significant pieces of legislation brought into effect during this political term,’ said Employment & Social Security president Peter Roffey.
‘The intention and experience from elsewhere is that most people who have been enrolled into a pension scheme will choose to stay in and this will result in a significant number of people saving more for retirement.
‘This will help to avoid the prospect of a major problem with pensioner poverty, while also maintaining a sustainable welfare budget in the long term.’
Under certain circumstances, employees may be able to opt out of their employer’s pension scheme.
Employee and employer guidance on secondary pensions can be found at www.gov.gg/secondary-pensions.
