Whit aboot ma Pension?

One of the many lies peddled by Better Together during the 2014 Independence Campaign was the one that in an independent Scotland pensioners would lose out on their pensions; perhaps even losing them completely. This lie is still dripping away.

It is no coincidence that it was the higher age groups, those either drawing a pension, or about to, who voted proportionately more for “No” in 2014. These age groups are also those less likely to take their news from sources other than the mainstream, union-supporting media.

Let’s debunk the lie.

Firstly, private/occupational pensions are funded internationally from invested funds and it makes no difference whatsoever where the recipients paid into them or where they now live. Even Better Together wouldn’t be stupid enough to claim that these are at risk from an independent Scotland. It is the public pension they refer to.

So, let’s consider the public pension.

At the moment the UK government sends millions of pounds overseas to pensioners who earned their pensions by making National Insurance contributions in the UK during their working lives. These “expats” (more correctly “immigrants” in the countries they reside in) live in large numbers in places such as Florida, Portugal, France and, particularly, Spain. The UK Government confirmed that this would continue if Scotland were to become independent. Although there was some coverage of this in the better elements of the unionist media, it was kept as quiet as possible.

Let’s be clear then – anyone receiving a pension at the moment will continue to receive that pension from the UK Government, even if residing outwith the UK (including in an independent Scotland), and it will be on the same terms as anyone living in the UK has.

What about those not yet receiving a pension?

Arrangements regarding those not yet of pensionable age will be determined by negotiation between an Independent Scotland and the Rest of the UK (rUK). Now, no-one can know where these negotiations lead so here are my own thoughts on 3 possible scenarios.

1 – Scotland takes over full responsibility for payment of pensions. However, there would require to be a settlement from the rUK that involves payment for part of the National Insurance contributions made by all of the Scottish workforce up to the date of independence. This payment would be extremely large and, as the rUK would struggle to find funds of this nature, I don’t see this happening.

2 – Scotland and rUK operate a joint pension arrangement. Now, had there been a pension fund built up for pensions this might be possible (see NOTES below), with both Scotland and rUK continuing to pay into it and draw from it. However, as pensions are funded from current revenue, the level of cooperation that would be essential between the national governments might just be a step too far.

3 – Scotland starts its own pension system (hopefully establishing a pensions fund as part of it). Those reaching pension age will have a pension from the UK based on their contributions pre-independence, PLUS one from Scotland based on post-independence contributions. As time progresses those reaching pensions age would see the balance of their 2 pensions alter – more from Scotland, less from the UK. Politically, the Scottish pension would need to be at least at the same level as that of the rUK.

Now, what is not widely known is that the current UK pension is amongst the lowest in Europe at around £155 per week – roughly £8,000 per annum. Surely Scotland could do better than this? In another item The Playgroup will argue that – contrary to what the unionist media still claim – an independent Scotland will be much wealthier than it is at the moment and so pensions paid in that independent Scotland will be higher than in the rUK. (It could also be the case that the current trend to increasing pension age could be halted.)

I think that this option (3) is the more likely of the 3 outlined. Readers, hopefully, including those from within the pensions industry, are invited to submit their own views and ideas. If I am totally on the wrong track, let me know (politely, please!) Everyone else, let’s get the message out that pensioners, now, and in future, not only have nothing to fear for their pensions, but could see themselves better off than if we remain in the UK.

NOTE

When the welfare state was introduced immediately after World War 2, by a Labour Party whose members must be collectively whirling in their graves at what calls itself “Labour” now, National Insurance contributions from employee and employer were intended to fund, on an ongoing basis, our new National Health Service, our Social Security and .. our Pension. Of course, subsequent governments, hell-bent on “maintaining Britain’s world position” treated National Insurance as just another tax to be thrown into the pot and spent. Just like with oil taxation revenue from the 1970s to today, no fund was set up from which we could draw for future social expenditure, like the Pension. So, pensions, social security and the national health service are funded from current tax revenues, including NI.