On the eve of the 1st of May Workers’ Day celebrations, the Government has today, by Extraordinary Gazette published a Bill for an Act that will ensure that private sector workers are entitled to have a choice, by law, on whether they wish to make a contribution to a pension plan.
The Bill provides that, should an employee choose to participate in a pension plan, the law will require the employer to contribute towards that employee’s pension plan.
Employers in the private sector will therefore have an obligation to provide a pension to employees.
The Bill sets out the minimum that will be required from employers in the private sector; although any employer wishing to do more – as many already do - can, at any point, increase their contributions.
With this Bill the Government says it ensures that every member of the community, even those in the private sector, are protected financially in their later years. By ensuring that everyone has access to a pension plan, an individual can then contribute more to that pension plan.
The implementation of the proposed law is phased so that smaller employers have more time to deal with the requirements and have a longer period to make the requisite adjustments. Large employers will be required to comply with the provisions of the Act by July 2021, medium employers will be required to contribute by July 2022, small employers by July 2025 and micro employers by 2027. The definitions of whether the employer is small/medium or large will follow the definition in the Companies Act 2014, with the requisite changes so that the definitions also apply to employers who are not companies.
The draft law envisages that workers on lower incomes will be able to contribute to a pension plan to be established by the Government.
Workers will be free to choose not to participate in a pension scheme but there will be a duty on employers to notify the Pensions Commissioner if the employee would like to participate in a pension scheme or otherwise. If the employee chooses not to participate, there is a relevant form for that employee to fill in.
Workers will be entitled to take the benefit of this law once they are 15 years of age, they are earning at least £10,000 per annum, and must have been employed by that employer for a year.
The Chief Minister, the Hon Fabian Picardo QC MP, said: “I am very pleased and very proud to see the publication of this Bill on the eve of May Day. The purpose of this law will be to begin to remedy the discrepancy that exists between private sector workers and public sector workers in respect of pension provision, to ensure that all workers in Gibraltar are adequately protected in their later years. We have consulted very widely indeed with unions and with employer organisations and I know that this Bill is a compromise in respect of the positions that each of those interest groups have presented to the Government. But it is right that we should be taking steps forward now in this respect, having had to pause progress whilst we dealt with the challenges of Brexit. Now it is time to move forward with this important new law which will be of great benefit to workers in the private sector who presently have no law requiring that pension provision should be offered to them; although many of our best private sector employers already offer schemes much more generous than the requirements of this law.”