Apply for a licence

Occupational Pension Scheme

FAQs

The purpose of this page is to make sure that the application process is fully understood.

This section sets out:

  • What is an Occupational Pension Scheme?
  • Who needs to apply for a licence?
  • What do you need to submit?
  • Capital Requirements

Occupational Pension Schemes

An occupational pension is a scheme generated by a company or organisation for the benefit of its employees.

An employer, or group of employers, can choose to set up an occupational pension scheme to provide pension and other benefits for their employees when they retire.

Occupational pension schemes are usually defined by the type of benefit they provide.

There are three main types:

  • defined benefit schemes (sometimes known as 'salary-related' or 'final salary' schemes);
  • defined contribution schemes (sometimes known as 'money purchase' schemes); and
  • hybrid schemes (mixture of defined benefit and defined contribution benefits).

Each of these can be funded by contributions from the employer only (a 'non-contributory scheme') or from both the employer and employee (a 'contributory scheme').

Defined benefit schemes

Schemes offered by employers that provide pensions for their employees based on the employee's salary and years of service, are sometimes called 'defined benefit' or 'final salary' schemes. The employer contributes to the scheme and there are trustees who look after scheme members' interests. You can only get salary-related pensions through an employer.

Defined contribution schemes

Schemes called 'defined contribution schemes' do not provide a pension based on salary or years of service, instead, they build up a pension fund that will be converted into an income when individuals retire. Usually, the employer contributes to the scheme and there are trustees who look after scheme members' interests. When individuals retire, the scheme administrator will usually buy an annuity for individuals.

An annual statement should be given to scheme members showing how much pension income members might get based on the value of the pension fund as of that date, taking account of future payments into the plan, how the plan might grow, future inflation and pension income from the fund when members retire. These statements only provide an illustration of potential returns.

Who needs to apply for a licence?

Schemes with over 100 active members who are persons currently employed and contributing to the scheme must be licensed.

An employer, or group of employers, can choose to set up an occupational pension scheme to provide pension and other benefits for their employees when they retire.

The firm should familiarise itself with the the Financial Services (Occupational Pensions Institutions) Act, 2006.

What do you need to submit?

An application pack is required to be submitted with all the relevant documents.

An application will not be considered complete if there are any outstanding documents.

The application pack must consist of:

Any other document the applicant considers the GFSC should take into consideration as part of the application.

Guidance

Please ensure that within the application, it is clearly set out how the proposed occupational pension scheme is to be set up, governed and administered. A description of the sponsoring undertaking should also be provided, including its activities, group structure (if applicable) and latest audited financial position.

When considering an application, the GFSC has to be satisfied that the Trustee(s) or any person associated with the management/administration of pension schemes, and its assets/liabilities, is "fit and proper" to hold that position. The "fit and proper" criteria includes both technical competence and integrity. The GFSC must be satisfied that the pension scheme satisfies the criteria set out in Section 5 of the Financial Services (Occupational Pensions Institutions) Act, 2006. The pension scheme must be adequately and properly governed and administered, and sufficient controls must be put in place to reduce the risk of error and fraud. It is mandatory that the pension scheme is set up under a trust and that, in order to protect members and beneficiaries, it should limit its activities to retirement benefit provision.

Role of the Trustees

Trustees must:

  • Ensure Investments are in line with the Statement of Investment Principles
  • Hold scheme assets securely
  • Ensure outsourcing is carried out properly
  • Act in best interest of beneficiaries
  • Give effect to trust deed and rules
  • Invest scheme assets or ensure they are invested adequately
  • Keep records and accounts of contributions to and from the scheme/give information
  • Collect contributions from the employer and employee
  • Invest them in accordance with the Statement of Investment Principles, or monitor that the investment advisor is doing so properly
  • Ensure that funds are protected
  • Ensure that the correct benefits are paid to the correct people at the correct time
  • Report to the relevant authorities on the financial conduct of the scheme.

Risk Management

The application should include details of how the trustees or any other person associated with the management/administration of the pension schemes conducts risk management, and in particular how the following risks will be mitigated:

  • That monies are misappropriated
  • That beneficiaries do not receive their full entitlements
  • That monies are not appropriately invested
  • That Defined Benefit schemes are not prudently funded to meet liabilities as they fall due
  • That members are not adequately informed about the scheme and there is lack of transparency
  • That the administration of the scheme is not effectively undertaken Member understanding/transparency
  • That trustees are not knowledgeable
  • That there are conflicts of interest
  • That bad advice is received from professionals
  • That an employer withdraws from a scheme without effective arrangements being put in place to protect the pension scheme
  • That Scheme assets/money is not adequately segregated
  • That fees and costs are unnecessarily high
  • That there is Insufficient Contribution Level
  • Investment risk / market risk (potentially having a significant impact on ability to accrue adequate pension benefits).

Statement of Investment Principles

The scheme statement of investment principles must:

  • Make clear who has responsibility for investment decisions
  • State the Investment objectives of the scheme
  • Set out the asset allocation strategy (Defined Benefit Scheme only)
  • Set out the types of investments that will be undertaken

Capital Requirements

There are no capital requirements for Pension Schemes.

The trustees need to ensure there is enough funding in the scheme to pay individual pensions in the future.

Application Forms

Should you get an error when opening any of the forms, please check the FAQ tab for guidance on how to override this.

  Application Form for Occupational Pension Scheme
 

Royal Gibraltar Police Vetting Form

Please note that an 'Individual Questionnaire' or a 'Notifiable Document' MUST be accompanied by a Royal Gibraltar Police vetting application form.  

  Material Document Checklist
  Pension Trustee Undertaking
  Individual Questionaire
  Trust Questionnaire

Where a trust is proposed as part of the shareholding structure of an applicant, the GFSC will need sight of a comprehensive explanation setting out the rationale for the use of such a vehicle within the structure.

 

Furthermore, the following is required to be submitted together with the Questionnaire

 

  1. Copy of the trust deed
  2. A written undertaking from the respective trustees to the effect that:
    • the provisions of the trust(s) in respect of beneficiaries, trustee(s) and terms of settlement are as contained in the relevant deed(s) dated [xxx],
    • the resignation of any trustee and, where appropriate, protector will be notified to the Commission forthwith,
    • no other trustee(s) or any additional or different protector(s) will be appointed, without the prior approval in writing of the Commission,
    • any proposed changes to the beneficiaries must be notified in writing to the Commission,
    • any proposed distribution or transfer for value or otherwise of any of the trust assets related to the applicant firm must receive the prior approval in writing of the Commission.
  3. Confirmation from the trustee(s) that they understand that failure to adhere to their undertaking may result in regulatory action against the applicant/regulated firm.

In addition to the Trust Questionnaire and the above listed information, the Applicant is also required to submit Individual Questionnaires for the settlor(s) and any named beneficiaries. This will not apply in cases where the beneficiary is a minor. In these cases, details of the individual will suffice i.e. name, DOB, address, nationality & passport number. When the trust is for example a discretionary family trust where not all beneficiaries are named (i.e. refers to spouse and children/issue of Mr X but does not actually name these individuals) a copy of the ‘letter of wishes’ of the Settlor, if any, will also be required.

In principle, the GFSC does not favour the use of nominee shareholdings for the purposes of holding shares, directly or indirectly, in a regulated firm. The Commission will therefore require that the applicant submit a paper setting out the rationale for the use of these structures in each instance where this is being proposed. This should include comprehensive details as to why it is necessary to hold the shares in this way.

Application Fees

The application fee must accompany your application. Please note, if you are applying for more than one licence, aggregate fees will apply.

Type Application Fee
Occupational Pensions Scheme £3,500

Annual Fee

The annual fee is not payable until your application is approved. For details of these please refer to the current Fee Regulations.

Under the GFSC’s annual fee methodology you pay a minimum base fee which is dependent on the set fee block assigned to your regulated sector. In addition to the base fee, you are also required to pay an additional amount that will be calculated based upon a range of factors including activity and income. To calculate the additional part of your annual fee the GFSC will need to review audited financial data and/or supervisory returns. At licensing stage, you will not yet have the requisite audited financial data or supervisory returns available for the GFSC to calculate the additional part of your annual fee. On this basis, the GFSC will only require you to pay the base fee at this stage and, towards the end of the GFSC’s financial year end (31 March), you will then be invoiced for the remainder of the annual fee which will be calculated based upon the financial data and/or supervisory returns provided by you up until that date.

Details on the payment methods can be requested from the Accounts team.

Service Level Standards

The current service level standards are:

  • To provide initial feedback to an application within 5 weeks of a complete application being received.
  • Once all of the information has been received from an applicant and the application is therefore considered to be complete, we aim to provide an in principle decision within 4 weeks.

Please be advised that the above service level standards refer to the period of time in which the GFSC holds applications for consideration. Where we require further information or documents from an applicant the service level standards will be suspended until we receive the requested information. The period of time an application is pending because of factors outside the control of the GFSC will not be accounted for under the service level standards.

Please note that should we be unlikely to meet our SLS’s, we will advise you as soon as possible.