"Secondary pensions" is a proposal by the States of Guernsey ("the States") to make it compulsory for all employers to set up a pension scheme for their employees – unless the employee actively “opts out”. We expect a staggered introduction of the scheme with the largest employers (26 staff or more) contributing from October 2023, smaller employers following thereafter (dates to be confirmed as the laws haven't been finalised yet) when all employers (even those with only one member of staff) will have joined in.

There are expected to be very limited exemptions – mainly low earners (weekly / monthly earnings below the social security lower earnings limit), people on very short-term temporary contracts, children under 16 and people over retirement age. The idea is that unless you consciously decide otherwise, everybody will have a pension to supplement any old age pensions they may receive in the future.

Employers and employees will both have to contribute to the scheme, with contributions starting at 1% (each) of gross salary in 2023 (expected start date). Contribution rates will gradually increase until the employer pays 3.5% and the employee 6.5% in 2029. The employer can pay the entire contribution if they wish, so long as they pay at least both parties’ minimum contribution (so 2% in 2023, rising to 10% in 2029).

The States are intending to set up a default scheme, available to everybody, which they will call Your Island Pension ("YIP"). We also expect that it will be possible for an employer to pay into an employee’s existing personal RATS (click here to see our FAQ on personal RATS), and many employers are choosing to set up multi-member schemes specifically for their employees. Click here to see our FAQ on multi-member pensions.

Secondary pensions will initially apply only to employers and employees (not the self-employed, or people who are not working but have other sources of income), though we expect the scheme will probably be extended in due course.

For more information about our bespoke pension services click here, or call Paulina Batiste or Krista Doggett in our Trust team.