Personal Pension  

Scottish independence may hit pensioners in the pocket

The 16-page paper, Scottish Independence: the Implications for Pensions, warned that if the Scottish population votes yes, pension costs could increase significantly.

The paper claimed that one of the biggest potential issues for UK pensions schemes would be the impact on their funding arrangements should they become cross-border schemes.

A more demanding funding regime is likely to lead to further closures of defined benefit schemes, and an increase in costs, which would have to be passed onto scheme members, and would, in turn, erode the value of their pension savings, it claimed.

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The paper added: “Unpicking the current regulatory structure, and the compensation structure in particular, would be extremely difficult, and would require careful management over a period of time.

“This is likely to lead to substantial costs for UK and Scottish institutions, as well as for sponsoring employers and schemes.”

The paper also revealed that a change in income tax thresholds, something that the Scottish government can already impose - and a power that the Welsh government also seeks, could have an effect on auto-enrolment and pensions tax relief.

It added that any complexity in regimes between Scotland and the rest of the UK could add to administration costs, and could again, potentially be passed on to savers.

Key facts:

■ NAPF members in Scotland include: Strathclyde, Lothian and Falkirk Councils; as well as Heineken, House of Fraser and Scottish Power

■ In total, NAPF Scottish members have combined assets in excess of £70bn

■ More than 750,000 employees are saving into these schemes, which provides retirement income to 330,000 pensioners in Scotland

Source: NAPF

Adviser view

Jeff Lewis, director of Edinburgh-based Robson Macintosh, said: “You have the Scottish government issuing its white paper on the referendum, but this is not costed and no one seems to have worked out the issues affecting companies and pensions not just in Scotland but across the border.

“Pensions issues do need to be highlighted and people do need to find out about this. How do you extricate all the assets and liabilities – it is a bureaucratic nightmare and I think people pushing for this are living in a fantasy, even given Scotland’s financial black hole.”