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The first phase of Guernsey's new secondary pension scheme has come into force with any business employing 26 or more people needing to enrol them on to an approved scheme.
Firms with smaller numbers of employees will be phased in to the new scheme over the next 15 months.
Deputy Peter Roffey, President of the Committee for Employment & Social Security which has been behind the new law, said secondary pensions - which will include the automatic enrolment of employees onto approved schemes - will benefit everyone in the long term, including the island as a whole.
“This is a huge milestone for the Committee, for the States, and for islanders and I am extremely proud of the work from politicians, civil servants, and a range of third- party experts over the course of many years to bring this legislation to fruition," he said.
"This Law will support future generations of pensioners to achieve a more comfortable and financially independent retirement by ensuring that all employees have access to a good workplace pension alongside their States Pension. This will avoid the prospect of a major problem with pensioner poverty while also maintaining a sustainable welfare budget in the long-term."
Recognising that some employers with an existing pension scheme may need to amend their pension scheme rules so that it qualifies, a period of adjustment will be allowed for the initial six months of the Law.
"Most employers affected by this initial phase of the Secondary Pensions Law will already have a pension scheme in place. However, as we move into the next phase and beyond there will be more employers that do not have a pension scheme. I encourage these employers to get in contact with their chosen pension provider as soon as possible as it can take weeks or months to set up a pension scheme,” said Deputy Roffey.
Deputies backed the introduction of a legal requirement for employers to implement secondary pensions for their staff after being convinced it was necessary.
Compelling evidence was produced showing that the island needed to legally enforce secondary pensions to reduce the burden on tax-funded welfare benefits and the States Pension later in life.
It’s understood that 65% of Guernsey’s employed working age population have not not saving for retirement while the new legal secondary pensions will encompass all working adults as it is rolled out.
This month sees the legal requirement for businesses employing 26 or more staff, while from 1 October smaller businesses will have to automatically enrol their staff too.
Most employees aged between 16 and State Pension Age will be eligible for automatic enrolment with everyone meeting the criteria being covered by October 2025.
The States has set up Your Island Pension, which is governed independently by Sovereign Pension Services (CI) Limited, to facilitate the secondary pensions system.
Alternatively, employers can select a different qualifying pension scheme, but if their pension scheme is not made compulsory in their contracts of employment, they may also need to offer the YIP scheme as an alternative.
For employee and employer guidance on secondary pensions visit: Secondary Pensions - States of Guernsey (gov.gg).
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