Guernsey - the top class jurisdiction for pensions

22 December 2021

Written by Stephen Ainsworth Guernsey Association of Pension Providers

Stephen Ainsworth, President of the Guernsey Association of Pension Providers, extols the virtues of the governance and regulation standards of Guernsey's pensions sector...

Choosing the right jurisdiction in which to administer a pension plan is a key part of achieving good governance.

As an established centre of excellence with more than 40 years of experience for international retirement benefits schemes, including both personal pensions and occupational schemes, Guernsey is a top class jurisdiction for domiciling and administering personal and corporate pension schemes.

Adherence to international standards is key to internal good governance. Not only has Guernsey achieved this, holding membership of several standard-setting supranational institutions – including being a proud member of the International Organisation of Pension Supervisors (IOPS).

Guernsey pension providers offer a one-stop shop for the establishment, administration, and management of international pension plans. This includes providers from bank-owned institutions, independent boutiques as well as specialist legal, tax and actuarial advisers.

There are several advantages to personal and occupational schemes in Guernsey:

Personal pensions: Guernsey has a highly evolved pension industry supported by specific pension legislation and regulation. These Retirement Annuity Trust Schemes – known as RATS – enable international retirement plans to make payments to non-Guernsey residents and those who are internationally mobile, without the deduction of Guernsey tax. This means that investors’ assets are protected against double taxation, whilst the pension assets are internationalised, removing the risk of one’s wealth eroding due to currency depreciation.

Guernsey personal pensions are flexible, able to accommodate a range of plan needs. A 100% lump sum can be withdrawn at retirement, and there are no contribution limits. Locating a personal pension in Guernsey provides members with the flexibility to move to another country in the future, and there is a range of multi-currency investment options.

Members of pension schemes in Guernsey have the protection of the ombudsman, with depositor protection on all Guernsey-based bank deposits.

Occupational pension schemes: Guernsey’s 40(o) pension plan is a well-trodden path to multinational firms providing pensions for their international populations.  More recently this has been supplemented by 40(nn) retirement savings plans for multinationals providing gratuity schemes for their workforces.

Firms can take advantage of having a single, centralised retirement plan for employees in multiple locations. This reduces the number of counterparties, and therefore bureaucracy, involved and significantly lowers operational risk.

Guernsey specialises in achieving and maintaining scheme good governance, and the island’s service providers are committed to attaining good governance.

There are many other reasons to choose Guernsey to achieve and maintain pension good governance:

Stability and security: To build a structure on good governance, solid foundations must be laid, which can only be done in a jurisdiction that is secure and stable. As a Crown Dependency of the United Kingdom, with 800 years of constitutional autonomy and never a member of the EU, Guernsey is politically and fiscally independent from both the UK and EU. This third-country status has shielded the island from the fiscal and political ramifications felt on either side of the Channel and provided the island’s financial services industry with unrivalled stability and security – highly valued among pensioners.

Expertise: The island has developed expertise and specialisms derived from more than four decades of providing high-quality services. This includes the establishment, administration and management of international retirement benefit and savings plans.

A reputation for innovation: This extends to its corporate and personal pensions sector. In 2001, the island was one of the first jurisdictions in the world to regulate pension providers, which has created a culture of professionalism not found elsewhere.

A modern, principles-based regulatory regime: The Guernsey Financial Services Commission (GFSC), which conforms to the highest international standards, is respected by overseas clients, both private and corporate, and is recognised as a serious regulatory body in upholding compliance and high standards.

A culture of protecting the client: Guernsey is serious about its well-regulated environment. In 2015, an independent financial services ombudsman was established to oversee the pensions industry and its activities, providing enhanced protection for clients.

A culture of disclosure and transparency: The island has clear regulations on fees charged so that all fees and commissions are disclosed to pension plan members. Outwardly, the island is also transparent. Guernsey is at the forefront of standards on tax transparency and cooperation, whitelisted by both the EU (2019) and OECD (2009).

Proven track-record: Guernsey offers an excellent economic environment in which firms can flourish and innovate. As such, a substantial amount of economic activity is undertaken in the island, including many international retirement plans and savings plans for major multinational companies.

Guernsey’s pensions sector is also following the island’s stance and ambitions in green and sustainable finance. The Guernsey Association of Pension Providers (GAPP) has announced that it is committed to developing an ESG pension framework for its member firms to align with. The Association is aiming to develop and publish the framework in 2022, to enable Guernsey providers to begin aligning their operations with it as soon as possible.

Pension good governance must be built on a solid foundation. Guernsey’s political, economic, and environmental makes it an expert jurisdiction that you can trust.

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