Business panel: Will default pension scheme affect me?
I READ in your recent article that Secondary Pensions is coming into effect and a default States scheme will be launched – does that mean the occupational pension my company offers will no longer work?
Sean Gillease, business development manager, Sovereign, replies:
It is too early to say definitively; however it is unlikely that the scheme you currently operate would not be able to continue – although there may be some minor adjustments required to the scheme.
The States have made it known that they will agree certain ‘qualifying’ criteria that a scheme can satisfy and that will mean this is a suitable alternative to the Secondary Pension default scheme.
The details of the qualifying criteria are yet to be confirmed by the States, however it is anticipated that an existing occupational pension scheme that is approved by the Guernsey Revenue Service should be considered a qualifying scheme. There may be certain adjustments required in terms of employee/employer contribution levels to make sure it meets the States ‘qualifying’ requirements.
This is scheduled to come into effect in 2021 and we expect the States will engage with all local employers in the coming 12 months and so this should become more certain in the coming year.
The Secondary Pensions regime aims to ensure that the majority of the working population is saving adequately for retirement and therefore those who already provide their employees with access to a pension are likely to be least impacted.
Local independent financial advice should be sought by employers to ensure their pension scheme provisions, default or otherwise, meet their own requirements and those of the new legislation.