In this Q&A, we sit down with Anna Gray, Director at BWCI Pension Trustees Limited, to discuss Guernsey's unique regulated pensions environment as a secure, safe and stable jurisdiction of substance.
How has the increasing globalisation of businesses, requiring employment of international staff, impacted the need for international pensions and savings?
One of the key reasons an employer might seek an international pension or saving plan is because they are very well suited to give a single pension benefit package to staff in multiple jurisdictions. An assessment of whether there are any implications in the member’s home jurisdiction should always be undertaken. Where an international pension operated from Guernsey is suitable, employers can harmonise pension benefits across those jurisdictions, which is a key advantage.
Have you noticed any interesting trends in the corporate pension and savings market recently?
Locally, with the introduction of compulsory workplace pensions, similar to the UK automatic enrolment system, there is a vast increase in activity in terms of corporate pensions. We have also seen international employers wanting to attract, recruit and retain key staff and setting up and operating an international pension and savings plan is an excellent way of doing this.
Guernsey remains a jurisdiction of choice able to offer flexible international corporate pension and saving plans which, subject to implications of the jurisdiction in which members are based, can to a large extent be designed to meet the requirements of the employer – whether that is to incorporate a leaving service or termination benefit in addition to traditional retirement benefits, or other facilities/flexibilities.
There are also some interesting developments in the industry generally. In particular, the ESG framework has been developed by the Guernsey Association of Pension Providers (GAPP) for local pension providers who meet certain criteria. Indeed, BWCI have recently adopted this framework for our flagship Blue Riband scheme which includes an international pension and saving versions . This framework seeks to recognise the work Guernsey pension providers do towards achieving sustainable development goals and raise standards bringing ESG to the forefront of how plans operate and are governed.
How is Guernsey suited to meet the needs of the current market?
Guernsey is one of a very small number of jurisdictions that can offer truly international pensions and has many years’ experience of exactly that. We have an established and stable legal and regulatory infrastructure, an experienced workforce that is well trained in fiduciary matters and we operate in a regulated environment which means that employers across the world can have confidence in the pensions infrastructure offered.
There are a wide range of professionals (accountants, lawyers and actuaries, as well as trained professional administrators) with pensions experience in Guernsey. This results from Guernsey having been the leading centre for international pensions and savings for more than 40 years.
In addition, we have an established funds and investment industry that can support pension provision – although we are not limited to using these in the pensions we run. Professional training to support fiduciary activities is commonplace – for example STEP is very prominent on the island with many fiduciary companies positively encouraging staff to undertake professional qualifications.
From a personal perspective (I have practised as a pensions lawyer in Guernsey and currently work in a non-legal role as director of one of Guernsey’s largest pensions companies), I have experience of professions supporting the pensions industry from both sides of the fence. In my experience, the benefits of a small jurisdiction mean that you can get things done; the benefits of an experienced workforce (with those such as me and many of my colleagues bringing their professional experience into the administration of pensions) is that you are able to face and address issues robustly with a good understanding of the legislative, regulatory and investment infrastructure locally and internationally so that that there can be confidence in the resulting product.
How is Guernsey pension legislation different from other jurisdictions?
In Guernsey, the suite of pension legislation and regulation means that there is clear oversight not only of the providers as regulated fiduciaries, but also the pension plans which must operate in accordance with regulatory standards.
Our pensions legislation has a number of sources: principally trust law, tax law and regulatory (in particular robust anti-financial crime) legislation. In addition, pension providers operating commercially are regulated and subject to regulatory rules set by the Guernsey Financial Services Commission. Those rules were designed with a view to international standards and are intended to hold providers in Guernsey to the highest standards.
Further, I believe the Channel Islands Financial Ombudsman is a key part of how Guernsey can ensure that our pensions are operated robustly and fairly. The ombudsman is able to consider complaints from members across the world, is free for the underlying member to use when other resolution avenues are exhausted and has an express remit set out in legislation to ensure that members are treated fairly with powers to support this.
The other key defining feature of the legal framework is its flexibility without compromising standards. There are a range of different types of pensions permissible under our tax law with varying degrees of flexibility permitted depending on what is required. We are one of the few jurisdictions in the world offering international pension schemes for a non-domestic market and has been doing so for very many years.
Further, the size of the jurisdiction means that you can discuss issues directly with the decision makers. As a pensions provider, you may not always agree with the position our regulator or tax office takes on a matter, but you can speak to them, discuss difficulties arising and whether they might be addressed at legislation/regulation level and understand the approach.
Guernsey’s pensions industry is perhaps one of the longest running at 40 years, how important is this to decision-makers in choosing Guernsey as a domicile?
Guernsey has a robust and stable infrastructure that is supported by its experience operating in this area. Local pensions providers have their industry body, which is active on their behalf in liaising with authorities on developing initiatives/legislation. It results in strength in depth – and there is more industry experience here than in most other centres.
