Honesty needed on impact of Scottish independence

Finally answers to the difficult questions would be forthcoming. A blueprint for unwinding Scotland from a UK pensions system built up over generations was expected.

Unwinding Scotland from a UK pensions system that is already built... is a big risk

It didn’t happen. The nationalists ducked the hard questions and difficult decisions. The pensions document was less of a white paper and more of a wish list.

Scotland’s society is ageing faster than the UK as a whole with implications for the sustainability of a separate pensions system – state, occupational and personal.

Yet the nationalists refuse to engage with the reality. Instead of confronting the difficult decisions that Scotland’s demographic challenge poses, the Scottish government obfuscates.

Via the partial use of statistics, the nationalists reject the demographic projections endorsed by a variety of impartial authorities – whether the National Records of Scotland, the Office for National Statistics and even Holyrood’s own Scottish National Party-dominated Finance Committee.

The same refusal to come clean on the implications of breaking up the UK pensions system is evident in the nationalists’ attitude to the occupational pensions cross-border issue.

The Institute of Chartered Accountants of Scotland has led the way in highlighting the fact that cross-border defined benefit company pension schemes must be fully funded.

This is a huge issue, since leaving the UK by definition creates a border between the Scotland and UK – with hair-raising consequences for pensions.

Given the total UK pension scheme shortfall currently stands at hundreds of billions of pounds, the cost of doing business in a separate Scotland and UK suddenly just got much more expensive.

A serious pensions paper would examine solutions to this problem, however painful from the nationalist point of view.

Instead, once more, the Scottish government took the easy route. Apparently the 29 members of the EU who have to follow the funding rules on cross-border schemes established by the Institutions of Occupational Retirement Provision will look kindly on the nationalists’ request for special treatment.

One might call this the Micawber approach to pensions: the nationalists always assume something will turn up in the end.

In truth, unwinding Scotland from a UK pensions system that is already built, sustainable and has the spread of population necessary to absorb demographic change, is a big risk.

That’s why the Scottish government refers to a “pan-UK” pensions system after independence.

Here’s a thought: better just keep the UK.

Gregg McClymont is shadow pensions minister and MP for Cumbernauld, Kilsyth and Kirkintilloch East