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How will the changes affect me?

For trustees and other pension service providers

Pension providers and their advisers should start by considering the following question:

  1. Do you already hold a fiduciary licence under the Fiduciaries Law?
    • If yes – The Pension Rules will apply to you and you will be responsible for ensuring that you and the schemes which you form, administer and manage comply with the Pension Rules
    • If no – See question 2

  2. Will you need to hold a fiduciary licence following the amendments to the Fiduciaries Law in order to continue to carry out regulated activities in respect of pension schemes?
    • If yes – You will need to apply for a fiduciary licence to carry out pension business. Information on the application process is available on the GFSC's website. You may wish to consider obtaining legal advice on the process
    • If no – You are not required to comply with the Pension Rules but you may want to consider following them as a matter of best practice. As the amendments to the Income Tax Law have not yet been published, we do not know whether the amendments to the tax regime will affect unregulated trustees and other service providers of pension schemes but it is expected that the schemes themselves will need to comply

However, as the formation, management and administration of trusts (and the provision of advice in relation to the formation, management and administration of trusts) by way of business in or from within the Bailiwick of Guernsey is already regulated under the Fiduciaries Law, we would expect that most (if not all) trustees and administrators of pension schemes who are required to hold a fiduciary licence will already do so.

If you are in any doubt about the answer to this question, legal advice should be sought as there are significant penalties for carrying out regulated business without a licence (unless an exemption applies)

For licensed pension providers and other providers wishing to follow the Pension Rules as best practice

  1. Do you have policies, procedures and controls that are effective and appropriate to enable compliance with your obligations under the Fiduciaries Law and the Pension Rules?

Existing governance and internal controls procedures should be reviewed and, if necessary updated or replaced. (Where a licensee is a company, compliance is the responsibility of the board of the company.)

  1. Does the scheme documentation (trust deed, rules and supplemental documents) for the individual schemes you administer and manage need to be amended or updated to enable you and those schemes to comply with the Pension Rules?

  2. Does each scheme have a statement of investment principles which apply to it?

  3. For schemes other than occupational pension schemes, is it clear from the governing documentation whether investments are 'member directed', 'provider directed' or 'third party directed' and do they enable compliance with the Pension Rules applicable to each type of approach? Does the documentation need to be updated to reflect what actually happens in practice?

  4. Do you already produce a "Contribution Schedule" for your schemes or do you have sufficient information (or access to information) to prepare this?

  5. Do you hold or have access to full details in respect of all charges that are deducted, or which may be deducted, from a member's account and are you satisfied that such charges, and the basis for calculation, are reasonable?

We expect that some changes will need to be made to scheme documentation to ensure compliance with the Pension Rules, particularly older documents which may not have been updated for some time.

This is only a summary of the key issues to be considered. The draft Pension Rules run to some 51 pages and should be reviewed in their entirety by all licensees carrying out pension business to ensure that they will be able to comply with the detailed provisions of the rules

For employers

Technically, only licensed trustees and other pension service providers will be directly affected by the new Pension Rules – there is no obligation on employers under the Pension Rules to comply or to ensure compliance.

However, employers would be well advised to ask the above questions of the pension providers running their schemes and to ensure that they are satisfied that their providers (who they will be paying to manage and administer a scheme which complies with applicable law and regulation, and is fit for purpose) are taking steps to review and update their policies and procedures and, where necessary, the scheme documents, to comply with the new regime.

Employers may also have contractual obligations to employees in respect of their pension schemes. They should check their obligations under employment contracts to ensure that their pension schemes and providers comply with all any such obligations.

Employers should check their obligations under employment contracts to ensure that their pension schemes and providers comply