The scheme for Guernsey and Alderney was due to be established next year after being approved by deputies, but Brexit and Covid-19 have been blamed for causing a delay.
Industry sources said no alternative start date had yet been proposed. But a delay was not unexpected given the challenges of the past year, and that it could help businesses already hit by the pandemic prepare for the scheme’s implementation.
Local employers will be obliged to offer a pension scheme for staff if they do not do so already, and to make contributions of up to 3.5% of salary. Many are already making arrangements, they said.
‘I believe the impact of this proposal, if agreed, is positive, as the States will have more time to engage with and assist local employers to ensure readiness for the introduction of this auto-enrolment regime,’ said Sean Gillease, managing director of Sovereign Pension Services.
‘Local businesses would also have more time to prepare for the financial impact, which is likely to help many considering the challenging period we’ve just had. Employers who wish to proceed ahead of the legal requirement to do so could still set up a scheme with a local provider.’
Stephen Ainsworth, senior partner at BWCI Group, said the delay had been widely anticipated by industry, but the need to make pension provision for staff had focused the minds of local employers.
‘We are seeing a number of employers taking action now to introduce appropriate pension arrangements and not waiting until the formal introduction of the secondary pension scheme,’ he said.
Mr Ainsworth added he was pleased to see legislation and other work streams making progress – and that the introduction of the secondary pension scheme remained a priority.
‘This is important for the long term financial security of the retired population of Guernsey and the sooner that secondary pensions can be introduced the better.
‘However, for some industries the delay may be welcome, as they are recovering from Covid-19 related disruptions and may well not be able to bear the additional cost of pension provision for their staff at the current time.’
He added: ‘Because employers have the option of providing a qualifying pension scheme for their staff rather than the default solution of “Your Island Pension”, those employers which can do so are able to move ahead now with one of the Guernsey pension providers rather than waiting for the default scheme to be introduced.’
The default scheme is to be administered by a UK auto-enrolment pension provider specialist, but many businesses are setting up new schemes with local providers.
Details of the delay are set out in Employment & Social Security’s Social Security Contributory Fund Accounts 2020, due to be discussed by the States on 16 June.