Creating a national workplace pension system is a significant challenge for any country, but for island nations with smaller populations, more limited resources and the need for tailored engagement, the task can be even more complex.

When Sovereign Pension Services partnered with the Guernsey government to create and launch the island’s auto-enrolment workplace pension scheme, known as Your Island Pension or ‘YIP’, the project became a model for how to design and deliver a pension solution that works for an entire community.

It is now 18 months after launch and the scale of adoption tells its own story: over 800 employer applications processed, more than 600 employer schemes launched, over 3,500 active members enrolled and more than £4 million received and invested through contributions and transfers.

These outcomes demonstrate that when barriers to cost and complexity are removed, engagement quickly follows. The experience gained in Guernsey has provided valuable insights that can be applied to other jurisdictions. These lessons are relevant not just to island nations but to any market considering pension reform and auto-enrolment.

Planning and Structure

The success of Your Island Pension began with in-depth planning. Sovereign established a dedicated project team, which allowed us to anticipate potential challenges, forecast volumes and allocate resources effectively.

Stakeholder alignment was critical. The team collaborated with government departments, the revenue service and investment managers to ensure compliance and operational efficiency.

This approach reflects global best practice. Across the OECD, countries introducing auto-enrolment consistently cite strong governance, early stakeholder coordination and operational readiness as key success factors. As more jurisdictions move toward mandatory or automatic pension participation, these foundations become non-negotiable.

Designing for the user

From the outset, the focus was on user experience. For Guernsey, this meant simplifying processes for employers through payroll integration and clear guidance.

Cost and administrative burden are consistently cited as the main reasons employers do not offer pensions. YIP was designed specifically to address this challenge: there are no fees for employers, and members pay a simple flat annual management charge of 1%, with no additional transactional fees for standard events.

The results reinforce this design philosophy. Some 95% of employers surveyed said the application process was easy to understand, onboarding was straightforward, and they would recommend YIP to others. A pension system succeeds when it removes friction for those who interact with it most, a principle that applies universally.

Community engagement

One of the most important lessons learned on Guernsey was the value of direct community engagement to combat the natural response of anxiety and mistrust towards a new and unfamiliar system.

To overcome public scepticism, Sovereign organised a series of ‘drop-in’ sessions at local venues such as sports clubs and cafés in Guernsey to create a relaxed environment for discussion. This face-to-face approach helped build trust and drove participation well beyond what traditional mass communications typically achieve.

Importantly, engagement extended across the whole community, including collaboration with the Guernsey Disability Officer to ensure the system reflected the needs of all islanders.

For larger jurisdictions, scaling this level of personalisation may be challenging, but the principle remains the same: go to meet people in their own environment and tailor communications to different generations and levels of financial understanding.

Education

Education was a cornerstone of the project. Many individuals were unfamiliar with how pensions work, so Sovereign developed video tutorials, guidance materials and face-to-face sessions.

This need is reflected internationally. In countries preparing to introduce auto-enrolment, research shows that fewer than one-third of eligible workers are aware of the scheme ahead of launch. However, once enrolled, the vast majority choose to remain in the system – highlighting that education, not resistance, is the main barrier to acceptance.

Auto-enrolment changes the conversation from encouraging participation to helping individuals understand why staying enrolled is beneficial. Education must therefore be ongoing, multi-channel and culturally appropriate, particularly in jurisdictions with diverse workforces and varying levels of financial literacy.

Knowledge sharing

The insights gained from Your Island Pension have been shared across Sovereign’s offices, including Gibraltar and Malta. While each jurisdiction has its own regulatory and cultural context, the principles of strong governance, user-focused design and effective communication remain constant.

This knowledge-sharing ensures that lessons learned in one market can accelerate progress in another – reducing risk, improving outcomes and shortening implementation timelines.

Global Relevance

Auto-enrolment is becoming standard practice worldwide. Ireland introduced it recently, and many other countries are exploring similar reforms.

In jurisdictions with established auto-enrolment systems, participation rates can exceed 80%, demonstrating the long-term impact well-designed pension frameworks can have on financial resilience. For economies with evolving labour markets, robust and technology-enabled pension systems are no longer optional, they are essential infrastructure.

As auto-enrolment becomes the norm, younger generations will enter the workforce expecting pensions as part of their employment package.

This cultural shift represents a critical opportunity. Governments and employers that act early – and invest in simplicity, education and engagement – will be best placed to support long-term financial security and workforce stability.

Looking ahead

Our experience with Your Island Pension demonstrates that with the right planning, governance and community engagement, even complex challenges can be overcome.

With high employer satisfaction scores – including average ratings of over 9.4 out of 10 across ‘service’, ‘support’ and ‘likelihood to recommend’ categories – YIP shows that pension reform can deliver both scale and quality.

Sovereign Pension Services has proven expertise in delivering pension solutions and stands ready to support governments and businesses worldwide. If you would like to discuss how Sovereign can assist with workplace pension system development or auto-enrolment solutions, please contact us today.

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To explore these perspectives, we spoke with the Managing Directors of our three pension offices, asking them the same set of questions.

Sean Gillease (SG) Managing Director of Sovereign Pension Services (CI) Ltd	Cristina Cassar Difesa (CCD) Managing Director of Sovereign Pension Services (Malta) Ltd	Darren Whitley (DW) Managing Director of Sovereign Pension Services (Gibraltar) Ltd

Q1. What does the pensions landscape look like in your jurisdiction right now, and how is Sovereign positioned within it?

SG (Guernsey): The pension landscape in Guernsey is going through a period of rapid evolution and growth. There has always been a large number of specialist providers providing services to individual and corporate clients, based both locally and internationally. This continues but following the introduction of Secondary Pensions (auto-enrolment) in 2024 there has been a significant increase in local pension provision, which will help to ensure better outcomes for residents in the future and which has created significant demand in the local market. Sovereign is very well positioned in the Guernsey pension market, providing solutions for personal and corporate clients based in Guernsey and internationally. Sovereign was recently selected by the Government of Guernsey to manage Your Island Pension (YIP), which is a default auto-enrolment solution and was launched in January 2024. Sovereign has also seen increased interest in international retirement and savings plans for large international employers.

CCD (Malta): Until now, the pension market in Malta has primarily revolved around QROPS for UK expats. However, some very exciting things are happening locally as auto-enrolment is finally being introduced. Sovereign is exceptionally well positioned in this landscape, not just because we are one of Malta’ most established pension provider but also because our international experience enables us to partner with employers navigating this new world of auto-enrolment. Our solutions are robust, tried and tested but also tailored which is exactly what the market needs during this critical time.

DW (Gibraltar): Whilst a long standing QROPS jurisdiction Gibraltar has now introduced legislation around compulsory occupational pensions meaning the landscape mirrors that of the U.K. The Private Sector pensions act requirements commenced in 2021 and continues with a phased approach until 2027. Sovereign is now the largest provider of company pensions on the rock and is well positioned to take on all company sizes with tailored solutions to accommodate the act requirements.

Q2. What’s the biggest difference between personal and occupational pensions in your market? Which area is seeing the most growth?

SG (Guernsey): In the employer sponsored pension area (occupational pensions) the main area of focus for us has been the local auto-enrolment initiative, with YIP particularly. In this area we are dealing with business owners, HR professionals etc and their primary objective is to provide a valuable benefit to their employees. Growth in this area has been significant, driven by the compulsory secondary pensions law.

In the personal pension area, we are dealing with individual clients who want to make additional saving for their retirement, or who want to transfer an existing pension to us. This area can be complex and technical and there are arguably fewer providers able to assist in this specialist area than there would have been previously. Sovereign is well placed to assist having been providing these types of scheme for a significant number of years and with in-house technical expertise, including for pension transfer type cases.

CCD (Malta): The key difference is that to date, the majority of demand has come from QROPS and serving the retirement planning needs of UK expatriates. However, the introduction of auto-enrolment is a gamechanger and we expect this will drive significant growth in occupational pensions in the years ahead. Thanks to our international experience, Sovereign is one of the few providers with genuine occupational pension expertise, making us uniquely positioned to help employers build solid, compliant occupational schemes as this new market emerges.

DW (Gibraltar): Occupational pensions in Gibraltar are contributed to by the employer and employee whereas Personal Pensions are solely contributed by the individual. With the new act in force Occupational Pensions are growing at a rapid rate. Within two years from now every employee in Gibraltar will have had to offer one to their workforce.

Q3. What’s one misconception people often have about pensions in your jurisdiction, and how do you address it?

SG (Guernsey): There are many misconceptions. Many people believe that a pension is only worth having if you can afford to put 000’s of £ per month into it. The truth is for those with a decent amount of time to retirement even a small amount added on a consistent basis over a period of time will be worthwhile. I also think many people are nervous about pensions – there are lots of reasons why this view exists but that is one thing that we work hard to address. Trustee responsibility, member value and clear and concise communications are all ways we try to address that issue.

CCD (Malta): One common misconception in Malta is that pensions are only relevant at retirement age, or that the state pension alone will provide sufficient income. In reality, Malta’s state pension is relatively modest and may not cover the standard of living many people expect. Because the private pensions market here is still developing, part of our role is to raise awareness that additional retirement saving is not just optional, but essential for long-term financial security. By highlighting the potential tax advantages, employer benefits, and the flexibility of well-structured pension arrangements, we aim to shift the perception of pensions from a last-minute concern to an important part of future planning.

DW (Gibraltar): That they don’t need one! People often think the state pension will suffice to retire on but as with most jurisdictions across the world that is never the case. We often highlight the reality of what will be available and it works out very modest.

Q4. How does being part of a wider international group like Sovereign enhance what you’re able to offer clients locally?

SG (Guernsey): Being part of a wider group bring various benefits. In previous scenarios we’ve had clients who have relocated between jurisdictions that we have offices and this has allowed us to assist across both sites. In some cases we also have non-Guernsey resident clients who need support or assistance and given we have offices in many of the countries are clients are resident, such as the UAE, South Africa and Singapore we can arrange for them to meet with someone locally. It also ensures we are aware of ongoing developments, issues and trends across the globe as that can often have an impact on our clients and the services we provide.

CCD (Malta): Sovereign’s international footprint gives us a real competitive edge in Malta. We benefit from shared expertise and direct collaboration with colleagues in other jurisdictions. This means we can offer our clients insights and solutions informed by global best practice, not just local market experience. For a jurisdiction like Malta, where the pensions industry is still small and niche, this support makes a real difference. It helps us avoid common pitfalls and shortens the learning curve for clients and employers who are new to pensions altogether. Ultimately, the backing and experience of the wider Sovereign Group enable us to operate at a higher level of maturity and sophistication.

DW (Gibraltar): It enhances our offerings massively. We employee tax advisors, accountants and lawyers across the group so there is a depth of experience beyond that of our retirement planning field to pull on when needed. Occupational Pensions are not unique to us here in our Gibraltar office either. In Guernsey Sovereign are the provider of choice having won the contract for Guernsey Your Island Pension’s. Our experienced across both offices is often shared to good effect so that is a strength and depth that stands us apart from other providers.

Q5. If you could give one piece of pensions advice to a client starting their retirement planning today, what would it be?

SG ( Guernsey): Get started. Even if the amounts you start off with are small – time is your biggest asset and so those small amounts now can make a huge difference in the future. Also make use of any employer support you can get. If your employer offers a scheme and will contribute into it for you – do not leave the scheme – you are essentially giving away free money and you’ll kick yourself down the line.

CCD (Malta): My advice would be simple: think carefully about your future self,  the person you’re planning for deserves security, comfort, and peace of mind. Just as important as starting early is being selective about who you trust to guide you. The wrong partner could put your plans and your future at risk. The right one will help you navigate uncertainty, stay compliant, and protect what you’re building. At Sovereign, we take that responsibility seriously and are committed to supporting clients throughout their retirement journey.

DW (Gibraltar): Don’t wait! Save a little and often and you won’t regret it in retirement.

To speak to a pension expert from one of our three pension offices please use the contact details below:

Guernsey Office:
Sovereign Pension Services (CI) Ltd
T: +44 (0) 1481 811000
E: guernseypensions@sovereigngroup.com

Malta Office:
Sovereign Pension Services (Malta) Ltd
T: +356 27 888 132
E: maltapensions@SovereignGroup.com

Gibraltar Office:
Sovereign Pension Services (Gibraltar) Ltd
T: +350 200 76173
E: gibraltarpensions@SovereignGroup.com

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Guernsey-based Sovereign Pension Services (CI) Limited is compiling a series of articles exploring how globalisation and the changing employment market is impacting different sectors and employers.

This issue looks at the Non-Governmental Organisation (NGO) and charitable sector, often called the ‘Third Sector’. NGOs are independent not-for-profit entities dedicated to advancing humanitarian causes on both national and international scales, operating autonomously from governmental influence. Charitable organisations, on the other hand, are establishments committed to public welfare through acts of charity.

Various types of NGOs and charitable organisations exist, encompassing trusts and foundations, voluntary health entities, human rights advocates, environmental, conservation and wildlife groups, as well as other organisations. Trusts and foundations, which are private business entities, contribute financial support to charitable endeavours, including the arts.

These are all mission-driven entities that share a commitment to a cause rather than a profit margin. This sector often involves working cross border with a mix of both international and local staff, and often in challenging situations and locations.

The NGOs and charitable organisations’ market size has grown strongly in recent years. It will grow from USD331.43 billion in 2024 to USD353.21 billion in 2025 at a compound annual growth rate (CAGR) of 6.6%, according to the NGOs and Charitable Organisations Market Report 2025 by Research and Markets.

The growth in this period can be attributed to strong emerging markets growth, rise in household disposable income, corporate-NGO partnerships and increase in public donations.

The report predicts continued grow to USD443.2 billion in 2029 at a compound annual growth rate (CAGR) of 5.8%. The growth in the forecast period can be attributed to increasing corporate social responsibility, rising environmental awareness, increasing use of internet and economic growth.

This is a challenging sector on many fronts, especially with the recent headwinds. Funding is cyclical and volatile as the recent closure of the US Agency for International Development (USAID) by US President Donald Trump, after six decades of operations, vividly illustrates.

This makes it difficult to plan long-term. The impact of uncertainty means employment contracts are often short to medium term, which can make it hard to hold on to talent. Organisations can also lose leadership and expertise at inopportune times, particularly during times of increased risk or scrutiny, such as during a major crisis or political upheaval.

Add to that organisations can operate in a wide range of countries, where local legalisation can be a challenge, currency can be volatile and political situations can change. Security issues are also a growing trend. The United Nations (UN) confirmed that 280 aid workers died in 2023 and 281 in 2024, which it said was “the deadliest year ever for aid workers”.

The sector is also going through structural change and moving towards a more decentralised model of operation. Empowering local operations but needing to ensure compliance to policy and benefiting from economies of scale and simplicity where possible.

The major strength of this sector is its people. They are committed to their task and there is a strong collegiate attitude where people share knowledge and experience for the good of the sector. Humanitarian workers are passionate about what they do, with a can-do attitude and fortitude.

To meet the challenge of attracting and retaining staff and delivering on their duty of care as an employer, organisations were early adopters and have been using international pension and savings plans, often called ‘provident funds’, for decades.

International occupational pension and savings plans provide a cost-effective option with economies of scale. They are flexible enough to meet the challenges these organisations face by accepting a wide range of populations and locations, while the scheme rules and administration structures can be tailored to suit requirements and can be harmonised to treat people equitably.

For example, one plan can cover a global workforce and include all staff where there are no mandatory local pension benefits or where they are not considered sufficiently robust. The same plan can also include international staff who may move around the various country offices. The NGO can then harmonise the retirement benefits, which can be tiered by seniority or by staff category if required.

The most cost-effective option is for the plan to have one central administrative and payroll source but, if a decentralised structure emerges, organisations can use regional hubs to keep the costs lower by limiting the number of payroll sources. They can then recharge locally.

Organisations are always evolving, as missions conclude or change location, so an international plan is an easy way to bolt in new populations or remove old populations, as required.

Local staff will have the benefit of diversifying away from a potentially volatile local economy and currency. Employers can also include an additional voluntary savings portion to allow staff to save easily from payroll for life events such as marriage, house purchase or education, in hard currency. This can be deeply impactful and provides opportunities to all staff.

For international staff, this plan provides portability. It means they are not disadvantaged by a career working overseas and can enjoy a consolidated and consistent benefit. For NGO employers it helps to reward and retain talent and experience within the organisation.

The good news is that an international plan is simple to implement and administer and is also transparent in terms of information and fees. The latter can be paid either by the employer or the employee, or they can be shared.

Sovereign’s occupational international pensions and savings plan is a highly effective way to deliver on an employer’s duty of care, meet the challenges of global employee populations and save costs when budgets are under pressure.

We can build a new international plan or there may be organisations with existing plans that can save costs as budgets tighten and enjoy paperless administration by transferring to Sovereign’s digital solution.

For further information contact Jo Smeed below.

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Bahrain approved the law for the ratification of the pending income tax treaty with Guernsey on 23 April. The treaty, signed 29 September 2024, is the first of its kind between the two jurisdictions and will enter into force 30 days after the ratification instruments are exchanged and will apply from 1 January of the year following its entry into force.

The treaty covers Bahrain income tax and Guernsey income tax. Both jurisdictions will generally apply the credit method for the elimination of double taxation. Withholding tax rates in respect of dividends, interest and royalties are 0%.

The Mutual Agreement Procedure (MAP) in Article 23 includes the provision that if any issues of a case cannot be resolved under MAP within two years from being presented to the competent authority of the other party, the person that presented the case may request that the case be submitted to arbitration unless a decision has already been given by a court or administrative tribunal of either party.

The Entitlement to Benefits in Article 26 includes the provision that a benefit under the treaty will not be granted in respect of an item of income if it is reasonable to conclude that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of the treaty.

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Ten years from now, how, and where we work will have changed dramatically. The COVID pandemic lockdowns of 2020 offered unprecedented opportunities for employers around the world to trial working from home at scale. At the same time, many employees also began to understand that, in some sectors, modern technology enabled them to work effectively from anywhere, provided they had good connectivity.

The age of the ‘digital nomad’ has arrived and they can operate in a wide variety of professions that are conducive to remote work, from graphic designers and software developers through to consultants, educators and virtual assistants.

Shift change

The working population is changing as ‘Millennials’ (born between 1981 and 1996) and ‘Generation Z’ (1997 to 2012) take over from retiring Baby Boomers (1946 to 1964) and ‘Generation X’ (1965 to 1980) to make up the bulk of the workforce. Their expectations of what they want from an employer and how they are employed are challenging industries and employers to adapt.

The younger the worker, the more likely they are to want to work from wherever they want. A 2023 report by MBO Partners, a global talent solutions platform for self-employed professionals, found that 37% of digital nomads were Millennials and a further 21% were Gen Z. This compares to Gen X at 23% and Baby Boomers at just 13%.

These shifts reflect changing dynamics in the workforce and varying attitudes towards remote work and lifestyle across the generations. The MBO report expected this trend to continue as more Gen Z join the workforce and potentially adopt a nomadic working lifestyle in the next years.

Opportunities

Certain businesses now work on fully remote work models, taking advantage of the increasing flexibility in workplace arrangements across various industries. For employers, there can be big potential benefits. They can operate with smaller offices, draw employees from a much wider geographical pool and, due to the flexible working conditions, they can retain them for longer. There is also the opportunity to place some jobs in countries that have good connectivity, but lower salary expectations.

Workers gain freedom and choice. They can decide how and where they work and have the flexibility to adapt as their life changes. They can also choose who they work with, whether that is a single core employer or a range of different employers.

With the cost of living rising, they can earn in strong currencies and live in locations where their money will go further. They are also not limited to set working hours and, because they have the flexibility to manage their time, they will have more freedom to enjoy where they are.

How you choose where to live will also change. Digital connectivity rather than physical transport links will be key. That gives small jurisdictions and towns and villages the opportunity to compete and grow their economies. Smaller jurisdictions are already encouraging mobile people to live and work in their territory to benefit their economies through tax incentives or residence packages.

Considerations

The flip side is that competition for roles will not only come from the development of Artificial Intelligence (AI), but people will also be competing against a much wider global pool with different salary expectations. Consequently, digital nomads will have to constantly evolve, and educators should be considering how they need to prepare school children for the world they will be competing in.

Pension plan that follows you and your laptop

Now, more than ever, saving for the future is of vital importance. With people living longer and large generations now either in retirement or moving to retirement, the strain on governments to provide sustainable pensions for life is going to be an increasing challenge.

Gen Z are actuarially expected to live to the age of 100, which means that younger generations could be working well into their 80’s. It is unlikely these populations can rely on governments to support pensions, particularly as the income tax take of many countries may reduce with populations more open to working internationally and the coming revolution in AI and digital innovation.

As a result, individuals need to start saving early if they want to have control and choice as to when and how they retire. Sovereign understands the importance of this and provides an international personal pension (IPP) plan as an easy way to save for your future.

Our IPP is regulated in Guernsey and is therefore anchored in one tax neutral jurisdiction. Its members, however, can live and work anywhere in the world and continue to save with one consistent pension. The plan rolls up income gross of tax and pays out gross of tax, which gives you flexibility to choose where you want to retire.

It is also an online service, which allows you to consolidate your savings in one currency and one place, so it’s easy to keep track of and manage your savings. You are firmly in control. You can take loans from your savings, and you can have access to take the money either in a lump sum or income drawdown from the age of 50.

An IPP is simple, portable and flexible, so it can keep pace with your life. You can stop and start contributions if and when you need. You also benefit from the three ‘superpowers’ of investing:

• Time
• Compound growth
• $/£/€ cost averaging

To find out how Sovereign can help secure your future, please contact Sovereign Guernsey below.

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Mr Bradley is currently an executive director of Sovereign Pension Services (CI) Limited, STCIL’s sister company based in Guernsey. He joined Sovereign in 2019 as in-house legal counsel and joined the Sovereign Pension’s board in 2022. Having qualified as a lawyer in South Africa, his experience spans both the fiduciary and pension sectors but under his new role his focus will be growing the traditional private client services Sovereign offers to its international network; he will also continue to work alongside the sales teams across the Sovereign Group in promoting Guernsey as a key jurisdiction for wealth planning.

On his appointment, Mr Bradley commented “I am grateful for the opportunity and the trust that the Group and local Board has shown they have in me and whilst I know they are big shoes to fill, I am look forward to getting started. I am excited to continue to grow the business even further.”

Mr Bradley will replace the current MD, Stephen Hare, who has been appointed Group Risk & Compliance Director for the Sovereign Group. Having been with Sovereign for more than 20 years, Mr Hare opened the Sovereign office in Guernsey in 2010 and became its MD 2 years later. Mr Hare commented on handing over the reins – “I am excited to be taking on a new challenge within the Group, in the knowledge that the business is in safe hands with Martin”. Mr Hare will remain as a non-executive director of Sovereign Trust (Channel Islands) Limited.

The changes take effect from 3rd March 2025.

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The government of Guernsey said that gaining pass ratings in six out of the 11 categories in its latest evaluation by Moneyval, the Council of Europe’s anti-money laundering body, as well as passing all 40 recommendations around technical compliance, was a “significant achievement”.

Moneyval inspectors visited Guernsey in April 2024 to adjudge how local laws and regulatory and enforcement processes had improved against international standards in anti-money laundering and combating the financing of terrorism (AML/CFT) since the last inspection in 2015.

Moneyval evaluations rate 11 ‘Immediate Outcomes’ for their level of effectiveness as either high, substantial, moderate or low, with high and substantial regarded as pass ratings. Securing a positive outcome was a major priority for Guernsey given the importance of the island’s financial services sector.

Guernsey was only the third jurisdiction worldwide, alongside the UK and the US, to receive top rating for its implementation of both ‘sanctions on terrorist financing and oversight of non-profit organisations’ (Outcome 10), and ‘sanctions on financing of proliferation of weapons of mass destruction’ (Outcome 11).

The Guernsey government said two of the substantial pass ratings were of particular strategic importance to Guernsey internationally. In respect of ‘beneficial ownership’ (Outcome 5), Guernsey was described as having comprehensive measures to prevent the misuse of legal persons and legal arrangements and to ensure beneficial ownership transparency for legal persons.

Secondly, in respect of ‘international cooperation’ (Outcome 2), Guernsey said it had long prided itself on assisting other jurisdictions to deal with criminals and the pass rating was important for maintaining its positive regional and international reputation.

Guernsey’s remaining Moneyval substantial pass ratings were in relation to ‘risk understanding, policy and coordination’ (Outcome 1) and ‘terrorist financing investigations and criminal justice measures’ (Outcome 9). On the first of these categories, the report described the published risk assessments as high quality and found that a commendable range of measures had been implemented to address the risks identified.

On the second, Moneyval found that, although there had been no investigations or prosecutions in this area, all possible cases of terrorist financing have been thoroughly considered and the authorities had the skills and the knowledge to successfully detect and prosecute terrorist financing should it arise.

For the five areas where pass ratings were not achieved, four received the higher of the two fail ratings and included a substantial range of positive findings. For example, as regards the measures carried out by the private sector (Outcome 4), Moneyval concluded that most businesses in Guernsey implement effective preventive measures, risk-based due diligence and record keeping.

Other positive findings, included on ‘supervision of the finance industry and other relevant sectors’ (Outcome 3) that the Guernsey Financial Services Commission (GFSC) and the Alderney Gambling Control Commission had a very good understanding of risks, that they exercised their functions on the basis of risk and the GFSC actively exercised its enforcement powers, including against senior officers.

As regards the ‘use of financial intelligence’ (Outcome 6), the report found that the analytical products and intelligence reports produced by the Financial Intelligence Unit (FIU) were high quality, but it highlighted the limited extent to which they were used by law enforcement authorities to initiate investigations. The quality of suspicious activity reports (SARs) also remained a concern.

There were also some positive findings about the ‘confiscation of criminal proceeds and instrumentalities’ (Outcome 8), in particular the effectiveness of Customs in administering the cross-border cash control regime and the capacity to detect and restrain cash related to money laundering.

The only immediate outcome where Guernsey received the lower of the two fail ratings was in relation to the ‘investigation and prosecution of money laundering’ (Outcome 7). The report urged Guernsey to improve in this area while recognising that the establishment of the Economic & Financial Crime Bureau (EFCB) indicated a strategic shift towards pursuing money laundering activity that was more aligned with the island’s risks. It also acknowledged that, despite the low number of cases, all types of money laundering had been successfully prosecuted.

The report recommended 11 priority actions, which include:

• Strengthening efforts to obtain the necessary resources particularly in terms of skilled investigative specialists for the EFCB.
• Enhancing the quality and relevance of SARs, as well as addressing underreporting.
• Improving GFSC supervision by further recalibrating its risk categorisation process for investment firms and fiduciaries and revisiting the extent and frequency of examinations for medium-high risk entities to ensure they are adapted to size and risks.
• The GFSC, Registries and Revenue Service to continue and increase their supervisory activities to ensure that Regulated Entities, legal persons and resident agents are complying with their basic and Beneficial Ownership information obligations.

It its technical compliance assessment, Moneyval found Guernsey to be ‘compliant’ with 25 of the 40 FATF Recommendations and ‘largely compliant’ with 15 of the 40 FATF Recommendations. This demonstrated that Guernsey was one of only a few jurisdictions worldwide to have the necessary framework in place to meet all FATF Recommendations.

As a result, Guernsey has been placed into what is described as ‘regular follow-up’, which secures its position as one of the best, secure and safe jurisdictions in the world for financial services. It is expected to report back to Moneyval, under this process, in May 2027.

“This is about meeting international standards in anti-money laundering and combating the financing of terrorism and, while there are areas we need to improve, and we will, we have shown that overall, we meet the standards and compare positively to most other jurisdictions,” said Deputy Rob Prow, President of the Committee for Home Affairs and chair of the financial crime strategic oversight group.

‘It has been a privilege for me to lead the strategic oversight group for the last four years as we’ve worked towards this significant achievement. It has taken a huge collective effort between the States, industry and many other stakeholders across the Bailiwick to secure this successful outcome.”

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It’s hard to believe that it has been a full year since Your Island Pension (YIP), Guernsey’s new Secondary Pension auto-enrolment scheme, went live in January 2024. We are now more than 12 months into YIP operations, and I’m delighted to say that it’s got off to a good start.

YIP is a States of Guernsey (the Guernsey government) facilitated scheme, developed to ensure that all Guernsey employers have access to suitable, low-charge pension provision to meet their new duty to enrol all eligible workers into a workplace pension automatically.

Following our selection to manage the YIP scheme in March 2022, Sovereign had to get straight down to work in planning and preparing for implementation. Our core objective was to create a scheme that was easy, simple and affordable, and the feedback from YIP clients – both employers and employees – suggests that we have delivered on that.

Implementation for the YIP scheme was phased. Companies with more than 25 employees were required to automatically enrol eligible employees into an approved pension scheme from 1 July 2024. They were followed by companies with 11 to 25 employees on 1 October 2024 and companies with six to 10 employees on 1 January 2025.

In terms of numbers, we had received more than 350 employer applications to join YIP by the end of 2024, plus a small number of self-employed applicants. We launched 200 employer schemes during 2024 and, with almost 100 more schemes being launched in January 2025, we expect to bring our total membership up to nearly 4,000 employees.

There remain two operative dates in 2025. Companies with two to five employees are required to automatically enrol eligible employees into an approved pension scheme from 1 July 2025, while companies with only one employee must do so by 1 October. We anticipate that most small employers will join YIP, so these dates are likely to be even busier for us than last year’s operative dates.

Besides the statistics, a key measure for us is employer and employee feedback. We carried out a survey of employers who joined YIP and the feedback has been very positive. Some 95% of respondents agreed that the application form is easy to understand and complete, and the same agreed that the onboarding process is simple and easy. The responsiveness and engagement of the team is rated more than 4.5 out of 5. Importantly, 95% confirmed that they would recommend YIP to others.

This is particularly pleasing because a great deal of time and effort was spent to ensure that the employer experience should be as painless as possible and the feedback suggests that, for the most part, we’ve been able to achieve that.

Alongside the coordinated and proactive project work with the Guernsey government and Guernsey Revenue Service that was key to the successful delivery, Sovereign has also engaged with NEST Pensions in the UK, which operates a similar scheme but, of course, on a much larger scale. We were fortunate to be able to attend workshops with NEST’s senior leadership team to learn from their experiences and this helped to guide our planning and delivery.

This included a key focus on collaborating with payroll software providers to ensure that the YIP process was aligned with employers’ existing systems in terms of salary, returns and submissions. Sovereign developed a specific application programming interface (API) that payroll providers can use to integrate, which facilitates a single point of data entry for employers.

Besides the technological focus, we wanted to truly be the ‘people’s pension’ and bring YIP into the community. We have held drop-in sessions around the island, and one in Alderney, so people can come and chat in person, and we’ve also provided employee chats in workplaces throughout Guernsey.

In addition, Sovereign has created a ‘Knowledge Hub’ which gives access to a range of documents and tools to help employers and employees get the most out of their pension. We’ve also provided an award-winning financial wellness portal to increase financial literacy and reduce financial stress.

Throughout the year we have prioritised building our local client servicing team to ensure that the level of support for employers and employees is high. Following a local recruitment campaign our client servicing team has increased by eight full time employees, and it is testament to the hard work and efforts of that team that they’ve been able to join the business, learn the systems and deliver exceptional service during a period of high pressure, high volumes and workload.

2024 was also an exciting year for the rest of the Sovereign pension business with the take on of large international pension and savings plans as the business continues to grow both domestically and internationally.

Looking forward to 2025, our key focus is to ensure that those employers and employees who join YIP have a similar experience to those who have already joined and that we will continue to deliver a solution that is easy, simple and affordable.

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Guernsey’s parliament, the States Assembly, rejected a planned 2% rise in personal income tax rate that was proposed in the 2025 Budget and instead voted in favour of introducing a consumption tax, like Jersey’s 5% goods and services tax (GST), from 2027.

The tax plan came as the island faces a national deficit of £100 million this year. The introduction of GST had been rejected by Guernsey’s parliament three times in the past two years and the Policy & Resources Committee had instead proposed a temporary rise in the rate of personal income tax from 20% to 22% for two years to balance the books.

But when the Budget was debated in the States on 8 November, an amendment was tabled to introduce a GST in place of the proposed income tax rise, which was approved by 20 votes to 15. Proposers said it was the preferred way to raise most of the revenue needed to put the island’s finances on a sustainable footing.

The proposals for a GST from 2027 are not expected to return for approval before the general election in June 2025, so will need to be approved by the next States Assembly.

“An income tax rise is problematic for our competitiveness, whereas a GST is a tax that is applied in almost all of the world,” said Stephen Rouxell, finance and accounting lead for Guernsey’s Chamber of Commerce. “It also ensures that a number of people currently not within the tax frame living here in Guernsey would be brought into the tax frame.”

The Budget, which was published on 9 October, also included proposals for the introduction of a new tax regime to comply with the OECD’s Pillar Two framework for multinational enterprises (MNEs).

It was noted that additional revenue would accrue from the introduction of an Income Inclusion Rule and Qualifying Domestic Minimum Top-Up Tax for large in-scope MNEs with global annual revenues of more than €750m in accordance with the OECD’s Two Pillar Global Minimum Tax rules.

Regulations are expected to be implemented for accounting periods starting on or after 1 January 2025, but the availability date for the legislation is still uncertain.

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The members of Generation Z, the oldest of which are now in their 20s, are expected to live to 100 and beyond on average. With higher life expectancy and higher expectations of retirement, governments are increasingly looking to shift the responsibility of financing retirement onto the shoulders of employers and individuals because tax reliefs alone were no longer providing a sufficient incentive.

New Zealand was one of the first countries to grab the bull by the horns when it introduced regulations in 2007 making it mandatory for the workforce to save for retirement. The UK followed suit in 2012 and ‘auto-enrolment’ is now a fixture of UK pensions policy.

Put simply, auto-enrolment means employers must now automatically enrol employees, if they meet specific criteria, into their workplace pension scheme. Auto-enrolment contributions are made by the employee and the employer. This money then builds up in a pension pot.

Previously, employees either had to ‘opt in’ to their employer’s workplace pension scheme or had no employer pension provision at all. The situation is now reversed. Under auto-enrolment, employers must automatically enroll employees into a workplace pension scheme, and employees only have the right to opt out.

The legislative requirement was introduced under the UK Pensions Act 2008 and was implemented in phases. Large employers with more than 250 employees were required to automatically enrol all eligible employees into a workplace pension from 2012 and this was extended to all employers by 2018.

In April 2019 the phased introduction of auto-enrolment was completed when the minimum contribution increased to 8% of qualifying earnings, with a minimum of 3% contributed by the employer.

Gibraltar brought in similar regulations, with a phased delivery under the Gibraltar Private Sector Pensions Act 2019 and, as a significant pensions provider, Sovereign has been assisting employers to meet their obligations to provide a workplace pension scheme in a user friendly and cost-effective way.

The island of Guernsey has also now followed suit with the coming into force of the Secondary Pensions (Guernsey and Alderney) Law 2022. Sovereign was selected by the government of Guernsey to deliver a state auto-enrolment pension scheme that is open to all employers.

Known as ‘Your Island Pension’ (‘YIP’ for short), auto-enrolment is a major step for both employers and employees, so implementation is being delivered on a phased basis over a 15-month period.

The deadline for the largest employers – those with 26 or more employees – was 1 July 2024, while the deadline for employers with 11 to 25 employees fell on 1 October. The schedule continues into next year, with the deadline for employers with six to 10 employees falling on 1 January, 2-5 employees 1 July and finishing on 1 October 2025 for employers with only one employee.

The minimum level of contributions is also subject to a phased introduction. Initially the rate is 2% of earnings, with at least 1% paid by the employer. This will gradually rise to at least 10% of earnings, of which at least 3.5% must be paid by the employer, after eight years.

For Sovereign, it’s been an exciting journey to deliver a simple and affordable pension scheme to a diverse population in terms of age, financial knowledge and employment sector. There have been two major drivers of delivery.

The first has been to ensure we communicate in a way that puts our audience at ease and allows us to deliver the core messages required in language that is readily understandable and in an environment that is comfortable.

Pensions can be an intimidating subject for a lot of people. Small employers in particular are concerned about getting it right and are worried about any impact on their resources. Many employees, meanwhile, were oblivious to the need and worried about any impact on their earnings.

We therefore mapped the customer journey for the various stakeholders and created a range of different case studies to help us understand who we were communicating with and what formats would best enable them to access and digest the material. We also engaged with Guernsey’s Disability Officer to better understand the needs of everyone in the working community.

We’ve held drop-in sessions around the island in different types of location, such as sports clubs, so that we could meet with people in a more informal environment and in a place with which they were familiar. We’ve also supported employers to get the message across to their employees by giving on-site talks, whether to hairdressers, pre-schools or builders.

Pensions is very much a people business, and this programme of engagement has helped both employers and employees to appreciate that Sovereign is a Guernsey-based business delivering a Guernsey-based solution, as well as to understand the reasons behind the changes and why it is so important for everyone’s future.

Our other key focus has been on delivering stress-free administration, so that it has minimal impact on employers who are busy doing what they do. Employees can engage directly with our online knowledge hub and administration system, and many have found the process empowering.

Ensuring that onboarding is as simple as possible for employers, in terms of understanding what they need to do, how and when. We streamlined the documentation required and have invested in resources to ensure that onboarding is quick and painless.

We recently carried out a survey to help us benchmark how we are doing, and we are delighted with the results:

 95% agreed that the application form is easy to complete and understand.
 95% agreed that the onboarding process is simple and easy.
 The responsiveness of the team was rated as an average of 4.53 out of 5.00.
 The engagement of the team was rated as an average of 4.53 out of 5.00.
 95% stated that they would recommend YIP to others.

Sovereign has provided a paperless digital administration system for YIP, which means that users can log in, load data or make changes in real time. This allows users to engage with their pensions at times when it is convenient for them and also means that the service is not negatively impacted by sudden spikes of activity.

Implementing the YIP scheme in Guernsey has enabled the Sovereign Group to gain invaluable experience of, and expertise in, delivering pension change to populations. With the impact of higher life expectancy expected to be felt all around the world, we believe that auto-enrollment will soon be the direction of travel for many other locations, and we are well placed and resourced to play a part in effecting the transition.

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Guernsey-based Sovereign Pension Services (CI) Limited is compiling a series of articles exploring how globalisation and the changing employment market is impacting different sectors and employers.

This issue looks at the Maritime Sector and explores how seafarers can handle saving for their future whilst working at sea and not paying into a local pension. It will also explain how employers can deliver on their duty of care to employees and attract and retain good quality personnel in a competitive market.

There are three main categories of professional seafarer:

• Merchant – the largest sector in the maritime industry, including bulk carriers, tankers, container ships, ferries, cable layers, supply vessels and general-purpose cargo ships.
• Cruise – a complex market due to the large size of cruise vessels and the greater diversity and division of labour.
• Yachting – catering to luxury yacht owners and charter clients.

The International Chamber of Shipping Seafarer Workforce report 2021, prepared by the Baltic and International Maritime Council (BIMCO) and the International Chamber of Shipping (ICS) –two of the largest international shipping associations representing shipowners – estimated that there were 1.89 million seafarers serving the world merchant fleet, operating over 74,000 vessels around the globe.

But it warned that the industry had to significantly increase training and recruitment levels if it was to avoid a serious shortage in the total supply of officers by 2026. While diversity was also growing within the sector, with a 45.8% increase of women seafarers since 2015, that still only represented 1.28% of global workforce.

The cruise ship industry continues to grow. The larger ships have about one crew member to every 2.25 passengers, with the ratio closer to one-to-one on luxury lines. According to the Cruise Lines International Association, the industry expects to board some 36 million paying passengers in 2024, 20% more than in 2019.

Between 2025 and 2028, more than 25 ocean-going cruise ships are on order across the global cruise industry, of which 10 will have a double occupancy guest capacity of more than 4,000. With so many ships due to be launched, and of such scale, keeping these ships populated and delivering good service in such a competitive environment will be a challenge.

Although the yachting sector is much smaller, the Expert Vagabond website estimates there are up to 37,000 crew members employed across more than 6,000 superyachts alone, a figure that doesn’t include the many smaller yachts with professional crews.

Maritime Labour Convention (MLC) and Crew Welfare Standards

Hailed as the seafarers’ bill of rights when it came into force in 2013, the Maritime Labour Convention (MLC) set out for the first time the minimum requirements for how seafarers should be treated. It was introduced in recognition that the global nature of the shipping industry meant that seafarers needed special protection, especially since they are often exempted from national onshore labour laws.

The MLC applies to all commercial seagoing ships operating in international waters or between ports of different countries except fishing, naval and traditionally built vessels. The MLC covers any seafarer who is employed, engaged or working in any capacity on board one of these vessels.

It gives seafarers the right to a safe and secure workplace – where safety standards are complied with and where they have fair terms of employment, decent living and working conditions, including social protection such as access to medical care, health protection and welfare.

The MLC has certainly had an impact on the welfare of seafarers, but the real driver for increased employee benefits, such as insurance and pensions, has been the recruitment issues and competition for staff.

Pension Planning and Savings Challenges

The challenge for employers within the merchant and cruise sectors is that their employees have diverse skills, responsibilities, salaries and nationalities, with many unskilled and relatively low paid roles. It is difficult to find pensions or savings providers willing to take on these numbers and anticipated cash inflows.

By its very nature, seafaring is a highly mobile occupations and crews are distributed all over the globe on a myriad of different fleets and different vessels, both great and small. In addition, seafarers typically work in shift patterns, with nine months at sea and three months off per year, and employers often want to pay benefits only while they are at sea. The difficulty is how to manage that level of administration efficiently given the size and spread of employee populations.

Crews can live relatively cheaply while at sea, so it is a great opportunity to save. In some cases, particularly in the yachting and cruise sectors, they can also get expect to receive good bonuses and tips. So, it’s important that they make the most of their situation and put money aside.

Excellence is expected from this affluent client base, so owners have to work hard to keep the right experience and expertise onboard. The new generations of employee coming into the maritime workforce are more demanding in their expectations and are willing to move employers to find what they want.

To meet the challenge of attracting and retaining the right levels and calibre of staff to ensure good delivery of service, employers must evolve. Fortunately, digital innovations, such as Application Programming Interfaces (APIs) that permit the swift and easy transfer of data for employers and real-time portal access for scheme members, mean that pension schemes are now easier to implement and administer. It also means that the plans are fully transparent in terms of information and fees for both employers and employees.

How Offshore Pension Schemes Support Crew Savings

A professional pensions’ provider such as Sovereign can establish an occupational international pension and savings plan that is cost-effective and attractive for any numbers and any level of activity. It is flexible enough that the level of benefits can vary by population. It enables employers to deliver on their duty of care to all crew members and will help to instil reciprocal loyalty and commitment.

A trust-based occupational pension scheme will ensure the legal separation of the plan’s assets from those of the sponsoring employer. This provides an additional layer of comfort to employees because it protects the plan’s funds both from the employer and any party seeking to lay claim to the assets of the business.

An international pension and savings plan also provides employees, many of whom may not generally have access to investing in hard currency, with an opportunity to save easily from payroll with no minimum contribution level and at no additional cost for medium to long term life events.

A plan can easily be structured so that it:

• Pays an employer contribution that the seafarer can access when either they retire or leave the company.
• Ties the ownership of the employer’s contribution, through a vesting schedule, to a specified length of service before the seafarer has rights to it
• Provides a savings element to enable seafarers to save easily, with no minimum amount and penalty-free from payroll for life events such as a house purchase, wedding, children’s education or retirement.

There is an added advantage for crewing companies. Their employees can move around different vessels or yachts while remaining within the same plan. This provides consistency and consolidated benefits for the employees and assists crewing companies to retain seafarers who want a long-term career.

Sovereign’s international pensions and savings plans are a highly effective way to address the staff recruitment and retention issues within the maritime sector. To better understand their potential impact on your business, please look at our Maritime case study at International Solutions – The Sovereign Group

For further information or to get the process underway, contact Jo Smeed below.

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