Scottish pensions complex, uncosted and uncertain after separation

7 Jul 2014 02:47 PM

The Scottish Affairs Committee publishes its report on the Referendum on Separation for Scotland: Implications for Pensions and Benefits. 

• Report: The Referendum on Separation for Scotland: Implications for Pensions and Benefits
• Report: The Referendum on Separation for Scotland: Implications for Pensions and Benefits (PDF)
• Inquiry: The Referendum on Separation for Scotland
• Scottish Affairs Committee

A report published by the Scottish Affairs Committee says the Scottish Government's failure to properly cost its plans for both public and private pensions will leave Scots with uncertainty in an area where most value security.

Evidence to the Committee has cast very serious doubt over the possibility of a separate Scotland setting up a new benefits system by the 2018 deadline set by the Scottish Government.

Findings

The Committee found:

• The Scottish Government's stated plans to consider delaying the increase in the pension age to 67 and to pay a proposed higher starting-rate than the rest of the UK are almost entirely uncosted. The Committee urges the Scottish Government to give a clear proposal for a future pension age and  the full price of their plans, before the referendum, so that current and future pensioners can judge how much more expensive they would be.
• Many public pension schemes are not currently funded up to sufficient levels to cover all their commitments so the UK government steps in with additional funding. The Scottish Government has failed to make clear how much it would cost Scotland to bear these costs after separation.
• The Committee heard evidence that the proposed Scottish version of the UK Government's National Employment Savings Trust (NEST) would fail to match the value for money of the current UK system and could take a long time to set up.
• On working age benefits, the Scottish Government's plans have failed to acknowledge the costs and complexities of disentangling Scottish claimants from the UK welfare system.
• The Scottish Government's plans to run two parallel systems in a transition period to separation are unfeasible. There is clear evidence that establishing a new welfare system would be costly and complex and it could not be set up within the Scottish Government's suggested timetable.

Chair's comments

Ian Davidson MP, Chair of the Committee, said:

"The only thing definite about the Scottish government's welfare policies is uncertainty.

They cannot say what their pensions bill would be. They have no credible plans to cope with the rising costs of Scotland's ageing population. They don't know what their own promises would cost.

Pensioners - current and future - deserve certainty. Instead the Scottish Government offer no detail, no costings, no believable plan and what they are offering amounts to the biggest mis-selling scandal in history.

Without any Scottish Government plan, no Scot is able to plan for their pension after separation.

They are asking the people of Scotland to leave the strength of the pooling and sharing of resources in the UK for a future they cannot even begin to detail after separation.

"The people of Scotland deserve more respect from the Scottish Government."