A WORKING party involving industry professionals and representatives of States bodies is looking at pension options. It was set up following concerns that one company, Partnership Assurance, will be left with a monopoly when Norwich Union withdraws some services in June.

The latter announced at short notice that it was to withdraw personal pension plans and compulsory-purchase annuities from the beginning of February.

But following pressure from the Guernsey Financial Services Commission, the withdrawal was postponed.

Although there will still be plenty of alternatives for investing for a pension, including using fund managers and annuity trusts, these do not provide annuities for guaranteed retirement income.

A Rats is more cost-effective for large investments and while there is the option of going into a group Rats at a lower cost, it carries a more-limited investment range.

Mark Colton, partner of actuaries BWCI Group, said individuals investing in a Rats took on investment and mortality risks.

‘In particular, if they live longer than expected, then potentially their fund runs out. To protect against such outcomes individuals are recommended to have other sources of income, so they are not appropriate for everyone.’

He and senior manager John Martin are members of the working party alongside representatives from Treasury and Resources, Social Security and Income Tax.

Mr Colton and Mr Martin think flexibility is the best option for encouraging other annuity providers.

‘We should do what Guernsey does best, which is limit bureaucracy and unnecessary complications to do business here,’ said Mr Colton.

‘Being flexible on tax administration and acting in harmony with other offshore jurisdictions will give us the best opportunity.’

At last week’s Chamber of Commerce luncheon club, the pair spoke of the need to ensure competition. ‘Although Partnership Assurance has a lot going for it, as with any service there is the danger of just having one provider,’ said Mr Colton.

‘Rather than waiting for the inevitable, we need to think of ways to ensure competition or explore other options for the future.’

Norwich Union said the complexity of doing business in Guernsey, Jersey and the Isle of Man meant its operation was no longer profitable.

Different regulatory and tax systems from the UK and manual administration of tax payments all led to significant extra costs.

A number of proposals to make Guernsey more attractive are being mooted.

These include tax simplification on annuities, reduced compliance and discussion with the other Crown dependencies to adopt a similar approach. Another possibility is establishing a States-backed annuity provider.