We have been waiting with baited breath for an update on the proposed new secondary pension scheme from the States of Guernsey, with the text of draft law still not yet released creating an uncertainty about implementation dates and the precise scope of employers' obligations in relation to mandatory pension contributions. We previously reported on the scheme which is being proposed to supplement the primary pension obligations already in situ through employee and employer social security contributions by introducing additional and mandatory pension obligations for all Guernsey employers and employees.
On 7 April 2022, The Committee for Employment & Social Security submitted its Policy Letter outlining further details of the Your Island Pension (YIP), secondary pension scheme. Full details of the policy letter can be found here.
In that policy letter, the States of Guernsey are asked to agree that (in summary):
- the YIP be established as a private trust, managed by a trustee appointment by the Committee for Employment and Social Security (and in respect of which the States would act as Settlor);
- the Committee for Employment and Social Security be given authority to determine the terms of the trust and Rules for YIP;
- various compliance and anti-avoidance measures are incorporated into the legislation; and
- proposals for a pension saving scheme for self-employed and non-employed people be made during 2027.
Clarification has been provided on the auto-enrolment obligations with confirmation that it will be phased in for employers over a 15 month period based on the number of employees in a workplace, commencing, predictably with larger employers.
We are told to expect a release date of the full text of the law in Quarter 3 2022 and we will prepare a further briefing at that point once we have had an opportunity to review the actual text.
We would expect the proposals to be approved by the States of Guernsey at its next meeting, and subject to the legislation itself actually being approved by the States later this year, it is anticipated that the new secondary pension legislation will come into force on 1 October 2023.
As we reported earlier, we still believe that the devil will be in the detail and we await the finalisation of the scheme and accompanying legislation, which will be the appropriate time to comment further on the implication. In the meantime if you would like to discuss the issues further, please contact a member of the Guernsey employment team.