Jersey: Pensions: Flexible Approach

Last Updated: 17 February 2014
Article by Nancy Chien

Nancy Chien, senior associate, International Private Client Group, Bedell, says that significant changes are on the horizon for pensions in the Island.

Nancy Chien: 'Flexible retirement describes the situation where members of pension schemes are allowed to commence their pension payments while continuing to work.'

Flexible retirement will allow workers the flexibility to choose how many hours they work and how they use their pension savings.

The current Jersey pensions regime feels like a 1970s bungalow that has undergone a few licks of paint to cover up the cracks. However, the government has now decided that the Island needs to catch up with modern times as the existing framework is no longer fit for a 21st century workforce.

Tax Policy issued a consultation paper in October 2013, which contained proposals as to how Jersey's pensions regime can be modernised. The consultation closed on 10 January 2014 and it is proposed that the new rules will be lodged with the States for debate in spring 2014. The proposals, once they come into effect, will affect existing members, trustees and employers of all types of pension schemes in Jersey. Founders and employers should start thinking about the ramifications of these proposals for their businesses. Anyone with an interest in a pension scheme should consider the proposals in respect of their current retirement plans.

The consultation paper offers long-awaited flexibility, but it also seeks to introduce additional taxes.

One of the areas in which flexibility has been long-awaited is so-called 'flexible retirement'. Flexible retirement describes the situation where members of pension schemes are allowed to commence their pension payments while continuing to work. Currently, members of occupational pension schemes are prohibited from drawing on their pensions while still working. Flexible retirement has been allowed in the UK since 2006 and, as recognised by Tax Policy, in the modern world, attitudes towards retirement are changing. As people live longer, it is inevitable that they will need to work for longer. Flexible retirement will allow workers the flexibility to choose how many hours they work and how they use their pension savings.

It is not proposed that flexible retirement will automatically apply to all pension schemes. In order to take advantage of flexible retirement, employers will need to consider the employment law implications and pension law consequences of employees moving from permanent employment to flexible retirement. For instance, froman employment perspective it may be necessary to vary or draft new contracts of employment and amend staff handbooks and from a pension perspective to make changes to the trust deed and rules.

Another area in which flexibility will be introduced is a self-certification approval system, so that it will be the responsibility of each pension scheme to certify that the scheme meets the conditions of approval. It is proposed that standard forms will be made available and the Taxes Office will issue approval status if the form is completed correctly and the requisite form is furnished. However, the taxes office will review a number of schemes on an annual basis to determine if they comply with the conditions of approval. Schemes that are found non-compliant will have their tax approval withdrawn. Guernsey has already moved to a self-certification approval system.

The consultation paper introduces some new taxes on benefits paid to non-resident members.

It is proposed that tax is imposed on pension benefits (including lump sums) paid to non-resident members whose employment was carried on outside Jersey. Therefore, the current tax exemption offered by the Taxes Office for non-Jersey employees will be removed. This will affect schemes that have Jersey and non- Jersey members (for example, pan-Channel Island schemes), as the non-Jersey members will now be required to pay tax on benefits in Jersey under this proposal. The rationale for this change is to remove the risk that Jersey schemes will not comply with the requirements of UK legislation for QROPS (qualifying recognised overseas pension schemes) on the basis that non-residents would otherwise receive preferential tax treatment compared to residents. Individuals resident in countries with which Jersey has a double tax agreement may be able to alleviate their tax burden in Jersey or their home jurisdiction under the terms of such double tax agreement. However, individuals resident in other jurisdictions will be subject to Jersey tax.

Another proposal that is likely to have a major impact on non-residents is the ability to transfer their pensions out of Jersey, but at the cost of a 10% tax charge. The rationale for the tax charge is to compensate the Treasury for the tax loss, as after the transfer it will not be possible to charge tax on pension benefits received by the member outside of Jersey, even though such member may have received tax relief in respect of his contributions into the scheme while he was tax resident in Jersey.

The consultation paper introduces some welcome changes to Jersey's pension regime, but it also seeks to introduce extra taxes which may catch out the unwary. There are many other proposals which are not discussed in this article. It is important that employers, trustees and members start planning for the changes that may be introduced, so that they do not inadvertently fall foul of the new requirements. A more detailed discussion of the consultation paper can be found on under the publications, pensions tabs.

Originally published by Law and Accountancy Review 2014.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Nancy Chien
In association with
Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.