Posted: March 19th, 2013
THE Scottish independence referendum next year could mean major changes on pensions – but so far there are more questions than answers, writes AMP chairman Tom Brown.
If Scotland votes “yes” to separation in autumn 2014, it would not only mean transferring state pensions to the new independent government. Pensioners south of the border should also be concerned because politicians on the anti-independence “Better Together” campaign are claiming there would be serious consequences for company pension funds like ours.
The Scottish National Party government in Edinburgh is to publish its own pensions plan in the next few weeks and say solutions will be found.
There was a heated row at the Scottish Parliament over a leaked document prepared by Finance Minister John Swinney for his Scottish Cabinet colleagues, in which he said: “I expect that the Fiscal Commission working group will consider the affordability of state pensions.”
Outside the chamber, I asked First Minister Alex Salmond about the status of company pensions in an independent Scotland. He and his advisers had no immediate answers but the FM obviously realised that this is a potential time-bomb and wants to defuse it.
The Shadow Pensions Minister in the Westminster Parliament, Labour MP Gregg McClymont, spelled out the problem for “cross border” funds such as Mirror pensions administered in London and making payments to those resident in Scotland. He told a BBC Scotland Question Time programme that under EU rules liabilities for cross-border funds have to be fully funded.
Experts in the pension industry confirm that under the EU directive such schemes have to apply for designation as a cross-border scheme where liabilities would need to be fully funded at all times. Given the size of the accounting deficit in Mirror pensions this is clearly impossible. There are also concerns that Scotland would no longer be covered by the Pension Protection Fund.
The SNP says it is confident these issues can be resolved by negotiation which will result in fairness for Scottish pensioners.
On behalf of the AMP, I will be raising these issues with the National Pensioners Convention as a matter of urgency. While it is not the function of the NPC (nor, for that matter, the AMP) to tell people how to vote in the independence referendum, there is a duty to ensure that pensioners have all the answers they need about how they may be affected.
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