All Guernsey employers are required to establish a suitable pension scheme for employees from 1 January 2022 and by no later than 1 April 2023, depending on the number of employees, and boards should be considering their options now.
André Trebert, executive director at BDO in Guernsey, reports that clients are already getting in touch to find out how the introduction of the scheme will affect them, but more businesses need to start considering the ramifications.
“The good news is that many clients are thinking about what kind of scheme will work for them,” said Mr Trebert. “But the introduction of this scheme will impact all businesses of all sizes so board members, directors and HR teams need to understand the parameters they need to comply with.”
Typical questions being raised vary from ‘will this apply to my business as I am already providing a pension for my employees, and if so, from when?’ to, ‘am I required to provide a pension for all my employees regardless of their employment status?’ and ‘how much will I be required to contribute and what are the tax implications?’
Secondary pension schemes and Retirement Annuity Trust (RAT) programmes have always been available for individuals who wish to make their own arrangements. In the new ruling, the secondary pension scheme creates a duty for every employer on the island to make pension arrangements for their employees. A scheme set up by The States of Guernsey is available to those employers who do not wish to incur the costs associated with setting up their own.
BDO is an active advisor to Guernsey’s commercial sector and has clients spanning retail, healthcare, real estate and hospitality as well as a wide portfolio of fund, private wealth and insurance sector clients.
Mr Trebert advised that each sector will need to take a bespoke approach to the requirements: “The scheme’s implementation will impact on various sectors and business models differently on the island. Employee benefit provisions vary greatly across commercial operations and this move creates an expectation among employers to offer a pension provision as part of their remuneration offering.”
Boards are being advised to act now to understand the requirements. “Employers who already provide a pension scheme will need to check that it complies with the new parameters,” said Mr Trebert. “Similarly, employers establishing a new scheme need to ensure that it is in compliance.
“There are different options out there that employers should be weighing up now in order to make sure they’re approaching the new regulations with the right scheme for them.”
View BDO’s summary of Guernsey’s new secondary pension framework here