Latest update: The Guernsey Committee for Employment & Social Security (“the Committee”) has confirmed that the new secondary pension policy will take effect on 1 July 2024 and will be implemented on a phased basis, starting with larger employers (with 26 or more employees). Over the following 15 months, smaller employers will be required to provide approved pensions in line with the updated table below. The Committee has also confirmed that the Your Island Pension scheme will be available for employers to voluntarily use from 1 January 2024.
Further details will be made available to employers by July 2023. More information and a list of FAQs can be found here.
Key details
To reduce reliance on low, state-sponsored benefits and to enable working-age individuals to save for a more comfortable retirement, the government of Guernsey has introduced a secondary pensions policy mandating the auto-enrollment of all employees into pension funds. The auto-enrollment pension scheme is not intended to replace any existing pension plans, but instead, to enhance saving options for retirement.
Employees, between the ages of 16 and the state pension age (currently 65 years and eight months), must be enrolled into the YIP plan or into a qualified employer-sponsored pension scheme within three months of hire. Employees will have the right to opt-out but will be automatically re-enrolled every three years. Additionally, employees will be allowed to opt-in after a period of six months since their last opt-out.
Employers that do not sponsor a qualified pension plan (the exact criteria are not yet available) will be required to automatically enroll all eligible employees into the YIP scheme. The YIP scheme will be established as a private trust and operated by Sovereign Pension Services (CI) Limited, chosen by the state of Guernsey.
The auto-enrolment mandate will be phased-in over a 15-month period beginning 1 July 2024 and a company’s staging date will be based on the number of employees as follows:
| Commencement date | Number of employees |
| 1 July 2024 | 26 and more |
| 1 October 2024 | 11 to 25 |
| 1 January 2025 | 6 to 10 |
| 1 July 2025 | 2 to 5 |
| 1 October 2025 | 1 |
Employees not covered by the mandate — including those older than the state pension age and up to age 75, employees earning below or above the minimum and maximum social security ceiling, and self-employed or unemployed individuals — can voluntarily join the YIP scheme or a qualified employer’s scheme. Employers will not be required to make contributions on behalf of employees not covered by the mandate. At this time, it is unclear if employees will be allowed to voluntary join the YIP scheme if they are already participating in a qualified, employer-sponsored pension scheme.
Contribution rates
The scheme will provide for a phased increase to contribution rates for the employee and employer as follows:
| Commencement date: 1 July 2024 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 (2031) | |
| Employee contribution | 1% | 1.5% | 2% | 3% | 4% | 5% | 6% | 6.5% |
| Employer contribution | 1% | 1% | 2% | 2% | 3% | 3% | 3% | 3.5% |
Next steps
Employers will need to review their payroll and administrative processes and account for the additional costs associated with the new automatic enrollment pension scheme. Employers should consider these changes in any current salary planning, pension plan redesign or pension contract renewal. Employers should monitor future legislation finalizing the requirements and implementation timeframes.