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What do we need to do? (Pension scheme included in contract of employment)

Glossary - Key Terms Contact Us - Secondary Pensions

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If your contracts of employment make membership of your pension scheme compulsory, your employee won't be able to opt out of the pension scheme.

You have the option of deferring the enrolment for your Designated Employee for up to 3 months, for example you might want to do this if they have a probationary period and have objectives or milestones you expect them to meet before joining the scheme. Further details on this can be found in the information below under the heading: 'You can postpone the enrolment into the pension scheme for your employee for a maximum of 3 months'.

This Law requires, subject to certain conditions, the following:

  • You must provide a pension scheme that meets the legal requirements

    • If you haven't already provided a pension scheme, you will need to provide a scheme that your employees can join.
    • You can do this by registering with a pension provider of your choice and setting up a pension scheme. To ensure that everyone will have access to an affordable pension scheme the States of Guernsey have facilitated the establishment of Your Island Pension (YIP). YIP is separate from other States functions and is governed independently by Sovereign Pension Services (CI) Limited. Employers will be able to use this scheme, or another eligible scheme of their choosing.
    • Pension providers will be able to give you confirmation that they meet the legal requirements, any pension schemes that meet the standards are officially referred to as an approbated pension scheme. If you are using a defined benefit scheme they must include an actuary's report to confirm that it meets the standards and you will need to ask them to provide this to you on a regular basis. Your pension provider will let you know if this applies to your scheme.
    • If you already have a scheme set up, you must check with your pension provider to make sure your pension scheme complies with the Law. Your pension provider will be able to tell you if anything needs to change. If you haven't discussed this with them already, make sure you get in touch with them to review this as soon as possible. 
  • You must pay at least a minimum level of contributions

    • The contributions are usually made up of employer contributions and employee contributions, and the amounts to be paid will depend on the pension you have set up. The minimum contributions that need to be made are a percentage of the earnings of an employee and the overall amount can be paid by the employer. Although you can exceed the overall amount and pay this entirely, you are not able to ask the employee to pay your percentage, therefore if you are following the minimum contributions you cannot ask them to pay part, or all of your contribution too. Further information on this can be found within the How much do we need to pay? page.
  • You can postpone the enrolment into the pension scheme for your employee for a maximum of 3 months

    • You can postpone when you enrol your employee into the scheme, and you are allowed to this for a maximum of 3 months for Designated Employees. Voluntary Employees have to be enrolled within a month of their request or within 3 months of their last opt out, whichever is the latest (see glossary for definitions of Voluntary and Designated Employees). You will need to provide them with written confirmation of what is happening and when they will join, this can be detailed in their contract of employment. There are benefits in postponing the enrolment date as you will be able to reduce the frequency in which you enrol new members.
    • Additionally, you might want to do this if you are employing someone on a short-term contract, or if your new employee has a probationary period and you want to wait until they have reached some objectives, or milestones, in their new role before joining the scheme. 
    • The 3 month period for Designated Employees is not contract specific, someone may have multiple contracts issued during the course of their employment but the deferral period only applies to the first 3 months with an employer. Compliance checks will be carried out by Revenue Service to ensure that employers do not rotate contracts through different companies to try to continually defer automatic enrolment. If this does happen the Revenue Service will impose penalties on those employers.
  • Do we need to issue one of the notices to our employees before our operative date?

    • If your employee is an active member of your pension scheme you won't need to give them a Notice of Enrolment. If you don't currently provide a pension or your employee isn't part of your scheme but is a Designated Employee, you will need to give them either a Notice of Enrolment or a Notice of Deferred Enrolment. Information on how to use the notices can be found on the SP1 - Notices of Enrolment and employer's obligations page.

Downloads

Secondary Pensions - Employer Checklist

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