An independent Scotland would face a public sector pensions bill of an estimated £1.1bn in 2015 to 2016, according to former Tullett Prebon global head of research Tim Morgan.
In a new report for the Centre for Policy Studies, Mr Morgan stated the rising cost of public sector pensions would impose “significant pressures” on a Scottish budget straitened by declining oil revenues and “the probable hemorrhaging of tax revenues from financial services.”
Calling the existing UK public pension system a “Ponzi scheme”, he argues Scotland is particularly exposed to the problem of more pensioners in payment than active contributors, as public sector employment is 24 per cent larger north of the border (21.2 per cent of the workforce) compared to the rest of Britain (17.1 per cent).
“What this in turn means is that Scotland’s share of public sector employment (10.2 per cent) is larger than its pro-rata share of the economy (8.2 per cent). Consequently, Scotland’s share of the public sector pensions gap is set to rise from £900m last year to a projected £1.8bn in 2019 to 2020.”
Mr Morgan also warned “those who assume that the financial services industry would carry on pretty much as before in an independent Scotland are gravely mistaken.”
He pointed to announcements last week, which saw most major Scottish-based financial institutions outline their contingency plans in the event of a ‘Yes’ vote.
