ISPs are an innovation of Jersey designed to enable multi-national and international companies to establish savings plans providing benefits to employees resident outside of Jersey. This might include a pay-out upon the end of employment or ill health. Depending on requirements, an ISP can provide either an alternative to or complement traditional benefits such as a pension scheme.

The Purpose of ISPs

Employee benefits are part of attracting and retaining employees. Businesses traditionally offer a contributory pension scheme, medical insurance, death-in-service insurance, bonuses and possibly a share or share option plan. However, more businesses are introducing shorter term benefits to accommodate specific requirements for both the business and its employees.

Employees are likely to work for several employers during their working lives and increasingly in multiple geographical locations. A saving plan could assist with employees’ relocation costs, purchasing a property in a new jurisdiction or assisting with children’s education fees. Furthermore, employees experience major life changing events such as injury, illness, divorce, redundancy or termination of employment, all of which a savings plan could assist with. In contrast to traditional pension schemes, a saving plan will enable employees to access funds at any time upon the occurrence of a major life changing event and regardless of their age or geographical location.

The ISP is incredibly flexible and can be prepared to suit the requirements of any business and its employees.

Requirements of an ISP

An ISP must contain the following features:

its sole purpose is to provide benefits in respect of a person’s employment wholly outside Jersey in a trade or undertaking;

it is established under an irrevocable trust under Jersey law in connection with a trade or undertaking carried on wholly or partial outside of Jersey and by a person not resident in Jersey;

it has trustees (either two or more individuals or a corporate) who are regulated by the Jersey Financial Services Commission; and

it is not a pension scheme or arrangement.

Benefits of an ISP for Employer

Flexibility: An ISP can be tailored to fit the needs of a specific company. The statutory requirements do not limit an employer to any particular benefits or circumstances when benefits can be paid.

Off-Balance Sheet: Should an employer be liable to employees upon a “life event” (such as severance pay upon the termination of employment), then contributing to an ISP can remove potential debt payable to an employee from the company’s balance sheet.

Attraction & Retention: Offering an ISP to employees should assist to attract and retain the best employees.

Safe Harbour: Jersey is a political stable, tax neutral highly regulated jurisdiction with a range of highly experienced professionals who can accommodate any employer’s requirements.

Benefits of an ISP for Employee

Access: Employees will be able to access funds in an ISP at any age upon a major life changing event and when they need it the most. By contrast, pension schemes have age restrictions as to when funds can be assessed.

Tax Neutral: Income derived from investments and deposits held in an ISP, and any benefits paid from an ISP, are exempt from Jersey taxes. However, taxation may be payable by an employee receiving benefits, depending upon the jurisdiction in question.

Trustees and Administration of ISPs

It is a requirement that a Jersey ISP has Jersey regulated trustees. All professional trustees resident in Jersey are regulated by the Jersey Financial Services Commission. Jersey was one of the first jurisdictions to regulate trustees pursuant to a financial services regulator. Depending on the requirements of an ISP, it may be that a trustee delegates part of the administration and/or the investment of an ISP to a regulated expert. The trustee would remain responsible for the administration of the ISP, but a delegate would contribute the necessary skills in the administration of the plan which a trustee might not possess.

Region Specific Examples where an ISP can assist – UAE Severance Pay

United Arab Emirates (UAE) Labour Law provides that a “worker who has completed one or more years of continuous service shall be entitled to severance pay at the end of his employment.” This severance pay is applicable to all non-UAE nationals and is calculated as follows: (1) 21 days’ wage for each of the first five years of service; and (2) 30 days’ way for each additional year of service provided always that the aggregate amount of severance pay should not exceed two years’ wage. Similar operating provisions are applicable in Bahrain, Qatar, Oman, Kuwait and Saudi Arabia.

UAE Labour Law does anticipate that businesses operating in the UAE might have schemes in place to meet the severance pay obligations. UAE Labour Law provides that should a business “have a saving fund for the workers, and the rules of the fund stipulate that the sums deposited into the fund on behalf of the worker is in return for the legal obligation with regards to the end of service gratuity, the saved amount or the duly due gratuity shall be paid to the worker, whichever is greater.”

Example 1

An international business operating in multiple locations opens a new office in Dubai. The business can establish an ISP for all of its Dubai based expatriate employees to comply with its severance pay obligations and to avoid an on-balance sheet payment to such employees in the future. However, the company can also tailor the ISP so its rules permit employees to access their severance pay prior to the termination of their employment upon a life changing event or for another specified purpose. Consequently, it would be the decision of the employee whether or not to access the ISP prior to the termination of their employment in accordance with the ISP’s rules.

Example 2

A local business in the UAE expanded its workforce to accommodate its increasingly busy activities. During this time, its surplus income was exported to its parent company outside of the region. However, the business then suffered a downturn in activity resulting in needing to reduce its workforce, all of whom are eligible for severance pay. Consequently, a previously profitable business now needs to borrow monies to fund its severance pay obligations whilst carrying on reduced business activities. Had the business established an ISP on an on-going basis, it would have segregated its severance pay obligations from its balance sheet, have been in a position to meet its debt obligations upon reducing its workforce and avoided further debt.


Jersey has been at the forefront of global finance for over 50 years and during that time has proven to be a jurisdiction of choice for employee benefit trusts. Jersey is a politically stable, tax neutral jurisdiction with a highly regarded regulatory regime, flexible and innovative legislation and experienced professionals making it an ideal jurisdiction for employee benefits and now savings plans. The introduction of ISP only enhances Jersey’s position and demonstrates Jersey’s seriousness of operating in this area.

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