The introduction of a modern supervisory framework for pensions a year ago has helped Guernsey consolidate its position as a leading jurisdiction in which to locate an international pension scheme
The framework, which brought Guernsey’s regulatory regime in line with international standards and enabled firms to bring regulated international pension products to market for the first time, came into effect from 1 July 2017.
Professional corporate trustees of Guernsey pension schemes have long been regulated, but the new regime means schemes themselves are now also regulated. This additional layer of oversight may also allow certain Guernsey pension schemes to apply for broad exemptions under the Common Reporting Standard.
The framework has been well received both locally and the wider pensions industry. Sean Gillease, Business Development Manager for Sovereign Trust (Channel Islands), said it was making a positive contribution towards attracting new international pensions business to the island. Clients and advisers are reassured by a comprehensive regulatory and supervisory scheme, leaving Guernsey better placed.
“The lack of a direct pensions regulatory framework was something previously quotes by some as a reason not to choose Guernsey for international pensions business, and so the introduction of new rules has strengthened our position to compete for further business.” The implementation of the necessary policies and procedures would also lead to a better quality of service, he added.
“The additional cost associated with this compliance may result in some providers determining that undertaking pensions business is no longer commercially viable, and there has already been some consolidation as a result, but we believe the outcome will be a smaller number of more experienced, specialist pension licensees.”
Nicholas Donnithorne, Partner at Guernsey law firm Babbé, said there had been a marked increase in the number of enquiries from international pensions providers and employers in connection with establishing or relocating international pensions schemes in or to Guernsey, with several such arrangements close to being finalised.
“Any pensions services provider wishing to operate internationally must consider having a toehold in Guernsey if it wishes to be taken seriously,” he said. “The island has an enviable depth of experience in administration of both domestic and international pension plans which is borne out in the number of plans administered in the jurisdiction. Coupled with a regulatory supervisory and advanced tax approval regime, this makes Guernsey suitably attractive as a jurisdiction for international pension schemes – not only to General Counsel or Human Resources departments, but also to employee benefits consultancies.”
Stephen Ainsworth, BWCI Group Senior Partner, and President of the Guernsey Association of Pension Providers, said a full regulatory regime had enabled a stronger proposition for local pension providers when presenting to new clients.
“While it is not possible to quantify statistics, the regulatory framework has certainly been helpful in both gaining new business and retaining existing business,” he said. “Guernsey pension providers are continuing to work closely with the regulator to ensure that the new regulatory regime for pensions is both proportionate and practical. This is an ongoing dialogue as we work through the transitional stage to full implementation from 30 September 2018.”
Guernsey Finance Chief Executive Dominic Wheatley said: “Guernsey offers a safe choice for individuals and companies looking for a pension solution. The island offers clients a reassuring mix of political and economic stability, good governance and more than 30 years’ experience in the sector. The island is not standing still, and we are listening to users of the framework, including pension consultants and scheme sponsors, to ensure Guernsey’s regime remains amongst the best anywhere in the world.”