Economics of Independence Pensions Scotland's Economy

Scotland better placed than the UK to support pensions claims expert

Written by Michael Gray

rachelholmes2013[1]Further evidence has been presented of the benefits of an independent pensions system for Scotland. Yesterday finance expert Rachel Homes backed up writing on Business for Scotland by stating that there is now “further evidence of why Scotland needs to be able to make our own decisions on pensions policy”. The article, published by The Herald, is entitled ‘Scotland better placed to defuse its share of UK pensions time-bomb’. Rachel Holmes is a Chartered Accountant and Lecturer in Accountancy and Finance at The Business School, Edinburgh Napier University. She is also a member of Business for Scotland.

‘Independence is an opportunity’

Holmes follows Jim Osborne, an experienced trustee of a major pension scheme, who also argued that Scotland’s pensions system would benefit from Scottish independence. He wrote than an improved pensions system “is exactly the kind of opportunity that independence brings, which business, government and the broader population could and should be debating in the lead up to the referendum next year.” Jim spent 6 years as a pensions trustee on the staff pension scheme for Allianz, an international insurance company.

This also followed the publication of the Scottish Government document ‘Pensions in an Independent Scotland‘. Scotland has a strong fiscal balance, providing 9.9% of the UK’s total tax base from only 8.4% of the UK population. This was backed up in the recent Institute of Chartered Accountants of Scotland (ICAS) report, which set out the practical arrangements and decisions that can be made on Scottish pensions following a ‘Yes’ vote.

UK Pension Shortfall

Rachel Homes criticised the UK Government’s claims that Scotland would struggle with pensions provision. As previously set out on this site, it is Westminster that had created a mammoth black hole in private pension schemes and let an anaemic state pension force the elderly in poverty.

Instead there are numerous examples of successful pensions schemes in other countries – other medium sized countries like Scotland – that perform more successfully.

Rachel’s analysis conforms to the view that UK state pensions are in a sorry state.  According to the Melbourne Mercer Global Pension Index, Denmark is the best place to be a pensioner coming first in the world.  The Netherlands, Australia, Sweden and Switzerland all outrank the UK, which slips down the list to a C+ rating.

Conclusion

This is also far more than a technocratic argument concerning the transitional arrangement for pensions assets. This is a democratic issue. The majority of people in Scotland, when polled, believe that the Scottish parliament should have full powers over pensions arrangements rather than the limited power Holyrood has at present.

Recent publications and analysis both on Business for Scotland and by Rachel Holmes have made this argument clearly. Scotland’s pension system would serve the people of Scotland better if it was controlled in Scotland.

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About the author

Michael Gray

Michael is Head of Research with Business for Scotland.

A graduate from the University of Glasgow, he has carried out a series of interviews with academics, politicians and the public in Denmark, Iceland and Ireland. Michael’s on twitter @GrayInGlasgow.

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