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
Similar Articles
Relevancy Powered by MondaqAI
Collas Crill Jersey
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Collas Crill Jersey
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions