Is your scheme independence-proof?

These include solvency requirements, which dictate that any cross-border scheme must be fully funded.

Any additional pressure to become fully funded is likely to further incentivise their closure to future accrual

But Kevin LeGrand, principal and head of pensions policy at Buck Consultants, says: “The proposal in the Scottish government paper that it will start discussions immediately to agreeing appropriate transitional provisions is unrealistic, if the objective is to agree those with the EU.”

He adds the “best they could hope for” would be to agree with the UK government what issues need to be addressed in the event of a yes vote and urged Westminster to “actively consider” what help it could provide to affected businesses on both sides of the border.

In August, Pensions Week reported on the “triple whammy” that shadow pensions minister Gregg McClymont predicted would hit Scotland’s pension provision in the event of independence.

This came amid government talks over how a split system would work, particularly in light of European solvency requirements.

No automatic benefits

The UK has enjoyed EU membership benefits that have been “hard won” and Scotland would not necessarily be granted similar privileges, says LeGrand.

“It is by no means settled that an independent Scotland would be allowed into the EU on terms it could live with at all, let alone within the 18-month window between a yes vote in the referendum and actual independence,” he said.

In the meantime, he adds, potentially affected employers “would do well to engage in this debate and spend some time identifying ahead of the referendum what their issues would be and how they would prefer them to be addressed, so that they are not starting from scratch next September [when the vote is scheduled]”.

Senior partner at Hymans Robertson, Ronnie Bowie, says since the outcome would affect the rest of UK as well as Scotland there is likely to be joint lobbying for an extended period of transition to ease the burden.

“I doubt there is anything to gain by starting to lobby now,” he adds, “because we don’t even know if Scotland would be accepted into the EU and we don’t know what currency Scotland would be using. So who would we lobby?”

Ian Gordon, a partner law firm Pinsent Masons, says the instance of a yes vote would be the point at which serious discussion could begin, as the EU is unlikely to spend time sorting out a problem that does not yet exist.

Schemes and employers should observe and take into account what the two sides are saying, but not take concrete action right now, he says.

“There simply isn’t enough certainty at the moment to justify anyone taking any action which might prove unnecessary and difficult and/or expensive to reverse,” he said.

The threat to DB

Steven Cameron, regulatory strategy director at pension provider Aegon, says if there was a yes vote there would be a lengthy transitional period aimed at ensuring as smooth a shift as possible, and warned anything less would be detrimental to defined benefit schemes.

“Any additional pressure to become fully funded is likely to further incentivise their closure to future accrual,” he adds

The Scottish government says it is prioritising the agreement of transitional arrangements with the EU. “We continue to press UK government to start discussions on this issue immediately,” says a spokesperson.

However, a Department for Work and Pensions spokesperson indicates that the Scottish governement’s efforts in this regard may be futile, adding it “cannot and will not” negotiate on behalf of one part of the UK with another part of the UK.

“Both the UK and Scottish governments agree there cannot and should not be pre-negotiations ahead of the referendum vote,” the spokesperson says.

The report also detailed plans to introduce a Scottish version of Nest called the Scottish Employment Savings Trust, as well as a “possible” equivalent to the Pension Protection Fund.

Graham Vidler, director of communications and engagement at Nest, says while the state-backed scheme regularly gives background briefings to relevant government departments in the UK and Scotland, it has not “explored what might happen should Scotland become independent”.

He adds the implications of independence on pension provision would depend on negotiations between the UK and Scottish governments.

The Scottish government did not state the likelihood of a splintered PPF in future, but says its preference was “for current arrangements to continue”.