The States of Guernsey has introduced the Secondary Pensions legislation to help islanders save for their retirement and reduce pensioner poverty. 60% of the Guernsey working population does not save into a pension.
The good news is that we are all living longer but this means that we all need to save to ensure we can have an enjoyable retirement.
What are Secondary Pensions?
Secondary Pensions is new legislation that requires employers to provide a pension scheme for their employees.
In order to help people to save for retirement, countries around the world have been making it easier for employees to save into a pension by introducing similar types of rules. Ten years ago, the UK introduced auto-enrolment, which requires employers to enrol employees into a qualifying pension scheme. The rules have proven to be very successful in helping employees save for retirement.
Secondary Pensions brings similar requirements to Guernsey, Herm, Jethou, and Alderney, with a legal requirement for employers to enrol relevant employees into a suitable pension. It is anticipated that this will significantly increase the percentage of the working population saving for their retirement, by ensuring that employees are automatically enrolled into a pension scheme.
Launching Your Island Pension (YIP)
To help employers and to ensure that all employers can comply with the new requirements, the States of Guernsey has facilitated the creation of Your Island Pension (YIP) which is a simple, compliant and affordable pension scheme that helps islanders save for their retirement goals. Sovereign Pension Services (CI) Limited has been selected by the States of Guernsey to administer YIP.
Any employers using an alternative approbated pension scheme (not YIP) will need to offer their Designated Employees the choice of joining YIP instead and provide a comparison of their chosen alternative scheme and YIP. They can do this by providing the information included in the YIP Comparison document and providing the relevant comparable information for their chosen alternative scheme, to allow employees to consider their options. This information should be provided to employees by employers when they send the Notice of Enrolment to their employees. If the alternative scheme is compulsory within an employee's contract of employment there is no need for the employer to provide the comparison or offer YIP as an alternative. The link to the YIP Comparison document is here: YIP-Comparison.pdf