Scottish gov’t outlines plans for pensions and regulation

The 670-page publication, Scotland’s Future: Your Guide to an Independent Scotland, was launched last week in Glasgow by Scotland’s first minister Alex Salmond, who said: “Independence will put the people of Scotland in charge of our own destiny”.

The paper pledged to support the continued roll-out of auto-enrolment, establish a Scottish employment savings trust, a Scottish pensions regulator and a financial conduct regulator which would continue to work closely with UK regulators, plus a Scottish version of the Financial Services Compensation Scheme.

On state pensions, the paper outlined plans to “ensure that current pensioners will receive their pensions as now, on time and in full”.

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The paper claimed that taxes would not immediately rise, while an independent Scotland’s first government could increase tax allowances and tax credits in line with inflation. It may also simplify the tax system to reduce compliance costs.

Alistair Darling, former chancellor and leader of the Better Together campaign, said: “People in Scotland wanted the launch to be about facts but all they got was a wish list.”

However in a statement, HM Treasury responded to the White Paper by claiming that taxes would increase in an independent Scotland by as much as £1,000.

Pension Points

The Scottish government’s pledge to set a rate of £160 a week for a single-tier state pension is based on indexing up the current DWP figure of £144 on an assumption of inflation, and then rounded up to £160..

An independent government would also set up a commission to investigate the appropriate state pension age and uprate the state pension to a ‘triple lock’ from 2016.

Pensions would increase by average earnings, consumer price index inflation, or 2.5 per cent, whichever is highest.

Adviser View

Tom McPhail, head of pensions research for Bristol-based Hargreaves Lansdown, said Scottish independence could increase the cost of financial services for savers and investors, while diverging tax and regulatory systems would create complexity.

He said: “This all has a cost to investors north and south of the border. In simple terms a ‘yes’ vote would mean poorer returns in the future on Isas and pensions due to higher administration costs.”