CGi comments on secondary pensions

Following the States’ approval of proposals requiring employers to offer occupational pensions, the CGi has been proactively discussing the opportunity for setting up a scheme on behalf of members firms with local providers. It is hoped that when the law comes into effect the CGi can provide information, guidance and assistance to its diverse membership.

The CGi recognises that some of its membership with a large workforce already offer a number of employee benefits with occupational pensions included as part of that package. The much smaller employers may struggle in implementing the new legislation. It is these companies that the CGi expects to have the most dialogue with.

We have also raised secondary pensions at committee level and have a number of comments.

There is acceptance that too many Islanders are deferring pensions for too long and the States’ pension will not be adequate or affordable to the taxpayers funding those who are in receipt. It is therefore a positive move to compel employees who can afford to save, to do so.

We are concerned, whoever, that younger generations and those attempting to secure financing or secure a lease for accommodation, will have to demonstrate affordability, so new pension contributions will eat into these funds. This demographic is more heavily motivated by take home pay and in a highly competitive recruitment market, this may push salaries up, which in turn puts greater pressure on smaller businesses in particular. These are very challenging times at present for everyone.

On secondary pensions in general, an auto-enrolment scheme has been in place for many years in the UK and whilst it means starting a pension early in ones working life, it helps avert poverty in old age. There are also tax advantages offered which make such a scheme attractive, particularly to higher earners. Neither of these levers, however, is available in Guernsey as a requirement nor an incentive.

The CGi has on its committee a representative from a local trust and pension company. We will be providing information on our website and individually to all of our members prior to the delayed legislation coming into effect. Hopefully this will help them with any potential issues that may arise and we would encourage all our membership to avail themselves of this assistance.

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