Building Pension Systems for Island Nations: lessons from Guernsey and beyond

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.