The introduction of a Secondary Pension regime for Guernsey has been on the States agenda for some time. Whilst the global pandemic has ultimately delayed the plans for its launch, Scott Rowe of Gower looks at what it will mean for Guernsey employers when it does finally reach our shores in the near future.
The proposed Secondary Pension regime is aimed at all employers with the emphasis to be on them to encourage their employees to save more for their retirement, so that they won’t have to rely solely on the States old age pension and tax-funded welfare benefits later in life.
As part of the new regime, employers will be required to offer enrolment in the new centrally run States Pension Scheme to all their Employees. The current funding proposal is that employees should start paying 1% of their earnings in the first year that the scheme is launched, increasing to 6.5% over a period of seven years. Employees will be able to opt out of the scheme, but in doing this they would miss out on compulsory employer contributions if they do join. The opt out period then lasts for 3 years at which time the Employee can then decide to join again. Provided the employee joins the scheme at the launch date, employers will have to pay contributions starting at 1% and increasing to 3.5% over seven years.
What is important to note is that employers have a choice. It will not be compulsory to join the States central scheme, employers can also opt to set up their own private qualifying scheme and make payments into this as an alternative.
Many employers are currently choosing this option. We have seen a positive response across various industry sectors and Employers are embracing the idea, even during these unique times. Setting up a company owned qualifying scheme provides them with greater control over the administration and operation of the scheme. Employers can choose their own investment management options and provide employees access to a range of other employee benefits. Greater flexibility whilst maintaining the ethos of the proposed Secondary Pension regime.
Gower offer a range of qualifying pension schemes to suit employer and employee needs. We are able to package these schemes with a range of other benefits including private medical insurance, death in service, income protection and expert financial advice, to guide employees in their retirement planning and ensuring employers are heading in the right direction.
Back to News
