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Jersey Chamber of Commerce

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Category: Local Business News  States of Jersey

Consultation on Pension Regulation

Feb 18, 2020

The Government of Jersey are seeking feedback from Chamber Members on Pension Regulation. Below are some of those proposals, which may be most relevant to members and for which they can bring their personal experience to bear. 

  1. Proposal to regulate management of pension schemes – presently Article 131 occupational schemes, excepting Small Self-Administered Schemes, do not require the scheme to be managed by a regulated person, i.e., someone who is a financial service provider and regulated by the Jersey Financial Services Commission or its equivalent in the UK or other countries. Your members may wish to indicate whether their scheme is manager currently by a regulated person and if not, whether they are aware of any particular risks or issues, which arise without the involvement of such a third party. Defined Benefit funding negotiations might be one such area or administration issues relating to payments and or transfers might be other relevant areas of concern. Members may also have a view as to the benefit of schemes not being required to involve a third party, who adds a layer of cost and potentially, may not dedicate the same time and energy as lay trustees who usually have some connection with the employer.
  2. Proposal to regulate the administration of pension schemes – there is presently no requirement to use a regulated service provider to administer approved occupational schemes or personal pension plans (the latter will involve a regulated person acting as trustee or as a qualified insurer, but the administration itself remains unregulated). It would be helpful to understand how your members view this proposal, what their concerns would be and what risks they think that such regulation would help close down. Particularly, where any of your members have had a bad experience with poor administration outsourced to a third party provider or even internally, it would be useful to understand what those experiences have been and how regulation might help.
  3. Proposal to regulate pension advice – the arena of pension advice on transferring out of benefits to different pension products, such as to another Defined Contribution or a Retirement Trust or a Drawdown contract or to a another employer’s occupational scheme, has been under the spotlight in the UK as a source of concern with members being given bad or incorrect advice. There is some narrative that similar issues have arisen in Jersey. It would be very helpful to know what your members, as employers and to whom employees may have complained about such practices, know about this issue and what sort of protections they think their employees should be given when they leave the employers’ scheme or chose to transfer their benefits into the employer’s scheme.
  4. Proposal to regulate scheme controllers – in the past a number of employers chose to outsource to an insurer the investment and management of the scheme. These employers remain like a quasi-trustee, responsible for the scheme and would be a ‘controller’. It would be helpful to understand how many of your members might be in this position and how they would view the prospect of being regulated and needing to be approved in that capacity.
  5. Proposal all types of approved pension arrangements should be within scope of regulation – this would result in all Self Invested Personal Pension Plans and all occupational schemes being required to operate under the supervision of the Regulator, report to the Regulator and to the extent the scheme/plan involves activities are not undertaken by a Financial Service Provider, those activities will need to be reported directly to the Regulator. It would be interesting to understand what your members might think the impact of creating this obligation would be, and what risks they think it would help address.
  6. Proposal to make Jersey Financial Services Commission the Regulator – Members may wish to give their views as to whether an organisation, which is responsible for regulation of financial service business should regulate pensions as pensions involve both financial service businesses and non-financial service businesses, such as the employer, scheme actuary, scheme administration (employer does internally) or scheme lawyer.
  7. Proposal to levy fee on the pension regulated industry for additional role of JFSC as Pensions regulator – if your members have concerns about the cost of pension provision being increased further and they feel this is disproportionate to the consumer benefits achieved by regulation, it would be helpful to have this feedback.
  8. Proposal not for the Pensions Regulator to take on a funding control role at this stage – Members may have some useful experience or views as to whether regulation without funding controls being put in place will give their employees false expectations as to how secure their pensions are and the protections they are being afforded. The funding control role is to police employer contributions, ensure they are adequate and timeously made, and to give members statutory protection as a creditors in the insolvent winding up of an employer.

Generally it would be very helpful to have a feel from members to know how many:

  • Offer an occupational pension arrangement for their employees
  • Offer pension benefits by way of making employer contributions into a personal pension arrangement
  • Operate a self-administered scheme
  • Their occupational pension scheme is managed by a group of individuals acting as trustees of the scheme
  • Manage the scheme administration internally
  • Offer no pension benefits at all

Members are invited to respond to just one proposal or to all of them or simply give a general view - The deadline for responses is Friday 28th February. If a member wishes to give a response but is concerned they won’t have sufficient time to do it before the deadline, please let us know.


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