The Bailiwick's Regulatory Framework for the Provision of Pensions Products (October 2016)

Summary

This is a 2016-2017 GFSC feedback and consultation paper responding to an earlier discussion paper on modernising the Bailiwick's regulatory framework for pension schemes and providers. It reports on industry feedback and, on that basis, sets out for consultation new Pension Licensees (Conduct of Business) and Domestic and International Scheme Rules, together with a proposed amendment to the Fiduciaries Law to bring formation, management and administration of pension schemes within the regulated activities perimeter. The paper also attaches the existing Retirement Annuity Trust Schemes (RATS) Rules 2015, which were already in force and being referenced/amended.

• Scope of new regime: Proposed rules would cover all pension schemes administered in or marketed from Guernsey, including both defined contribution and defined benefit schemes, and employer, group, personal, trust-based and contract-based arrangements, domestic and international.
• Fiduciaries Law amendment: Adds formation, management or administration of pension schemes to the list of regulated activities under section 2(2) of the Fiduciaries Law, bringing pension providers within the Commission's licensing perimeter.
• Notification requirements: Providers must notify the Commission of prescribed details on establishment of a scheme, including date of establishment, provider entity details (directors or partners), and service providers appointed.
• Annual reporting requirements: Schemes must report annually on membership numbers, whether the scheme is open to new members/contributions, changes to investment approach or third-party investment managers, contributions received, and total/prior scheme asset values.
• Fees: The Commission intends to introduce a supplemental pension licence fee on relevant licensees to recover supervisory costs, to be addressed through the annual fee consultation process.
• RATS Rules (already in force): Transfers from a Retirement Annuity Trust Scheme generally require a report from a suitably qualified person and a signed member declaration of understanding, unless the transfer value is £30,000 or less; schemes must also comply with any conditions imposed by the Director of Income Tax under section 157A.

The consultation period on the new Conduct of Business, Scheme Rules and Fiduciaries Law amendment closed in June 2017, with the revised regime intended to take effect shortly afterward, subject to a transitional period for firms to achieve full compliance. Because this record reflects a historical, now-closed consultation and the document's current legal status is unclear, readers should verify with the GFSC whether the proposed rules were ultimately adopted and are still current.

Key obligations

• Pension scheme providers must notify the Commission of prescribed scheme details (date of establishment, provider entity/director or partner details, and appointed service providers) on formation of a scheme, once the proposed rules take effect
• Pension schemes must submit annual reports to the Commission covering membership numbers, openness to new members/contributions, changes in investment approach or third-party investment manager, and contribution and asset value figures, once the proposed rules take effect
• Transfers out of a Retirement Annuity Trust Scheme (RATS) must be supported by a report from a suitably qualified person and a signed member declaration of understanding, unless the transfer value does not exceed £30,000
• RATS must comply with any conditions imposed by the Director of Income Tax under section 157A of the Income Tax (Guernsey) Law, 1975, including any gearing restrictions

Applies to

pension providers, pension licensees, fiduciary licensees, pension schemes (domestic and international, defined contribution and defined benefit), Retirement Annuity Trust Schemes (RATS) and their trustees/members

Deadlines

• 5 June 2017, 9:00am: Closing date/time for responses to the consultation on the proposed Pension Licensees Conduct of Business and Scheme Rules and the Fiduciaries Law amendment
• 30 June 2017: Intended date for the revised pensions regulatory regime to come into force
• mid to late 2018: End of proposed transitional period allowing firms and schemes to come into full compliance with the new rules