Workplace pension innovator Smart has been named as the preferred provider to deliver the secondary pension scheme which is set to be introduced into legislation by the States of Guernsey in 2020.
The global savings and investments technology platform provider will operate the State-sponsored Your Island Pension Scheme which will see all Guernsey employees automatically enrolled for the first time, once the legislation has been ratified by the States of Guernsey Parliament.
Deputy Michelle Le Clerc, President of the States of Guernsey Committee for Employment and Social Security, said:
“We’re excited to announce the selection of Smart Pension as the proposed provider of the Your Island Pension.
“Throughout the tender process Smart impressed us with their cutting edge technology and a ‘can-do’ attitude.
“We’re confident that Your Island Pension will change the pension landscape in Guernsey, ensuring every Islander has access to a product which is affordable but doesn’t compromise on service standards.
“We’re thrilled to be taking the first steps on this journey, looking ahead to a brighter and more financially sustainable future for Guernsey’s savers.”
Andrew Evans, co-founder and CEO of Smart Pension, said:
“It’s an absolute privilege to partner with the States of Guernsey right at the beginning of the island’s auto enrolment-style pension journey.
“The introduction of auto enrolment in the UK has transformed the retirement savings culture for workers and undoubtedly it will have the same impact in Guernsey. The fact that employees will make contributions from their very first pound of earnings shows the commitment that the States of Guernsey has to deliver a better retirement outcome for their residents. This element will undoubtedly be closely observed by the UK Government as it evolves.
“Your Island Pension savers will all benefit from Smart’s unrivalled savings and investment technology including an app which will display their savings balance in real time on their smartphones.”
The announcement follows the submission of the Policy Letter to Parliament to the island’s legislative body, the States of Deliberation. The savings scheme was first recommended in the States of Guernsey Personal Tax, Pensions, and Benefits Review 2015, which sought to address the provision of adequate retirement savings by 2020.
Although very similar to auto enrolment in the UK, Your Island Pension will be a single private scheme, overseen by the State’s Committee for Employment and Social Security, more like the UK’s Government-funded NEST.
Under the new secondary pension legislation: Employees will have the ability to opt out, and like the UK, there will be an obligation on the employer to re-enrol employees every three years. At that point the employee is, again, able to opt out.
- Employers will be required to contribute at a minimum level into the State’s secondary pension scheme, or a private qualifying scheme. Contributions will start at 1% and increase to 3.5% over a nine year period so that by 2030, all employers will be required to contribute 3.5%. Employees will also start by paying in 1% increasing to 6.5% over the nine years.
- Those who already pay into a private pension or Retirement Annuity Trust Scheme (RATS) will not be required to pay into a new scheme as well, provided that the private pension or RATS meets the qualification criteria.
The scheme is expected to launch in the first quarter of 2022.
Notes to editors:
- The States have estimated that 25,000 residents employed are not currently making any pension provision.
- They also estimate that 16,200 people will be joining a private pension scheme for the first time when the scheme is introduced.