Today's Scotsman adds further to the case against Scotland voting 'yes' in September with the claim that European Commission officials have declared there will be no change in the rules governing cross-border pension schemes.
According to the paper that means that a 'yes' vote will produce a massive pensions blackhole. They say that at present, many schemes are under-funded, as contributions from staff and employers have been insufficient to pay for pensions:
They add that single-country pensions have the flexibility to go into deficit as long as they are able to continue making payments to members of their schemes and there is a long-term plan to get out of the red. That does not apply to cross-border schemes, which must be 'fully-funded'. Yesterday’s ruling means that if Scotland becomes independent, firms would have to ensure pension funds for workers north of the Border were “fully funded” because they would count as cross-border schemes.
The paper says that one expert has warned the ruling will mean firms having to plug a pensions blackhole of as much as £225 billion after independence, though that seems a bit on the high side:
David Wood, executive director of the Institute of Chartered Accountants of Scotland, said it had been estimated there were some 6,300 defined-benefits schemes in the UK, of which about 5,000 were in deficit.
The total deficit, he said, was about £300bn. Assuming three-quarters of these pension schemes were across England and Scotland and would have to be redefined as “cross-border” ones after independence, that would leave a gap of £225bn that would have to be plugged by companies.
“We are talking about huge figures,” Mr Wood said.
“Any requirement to make good that deficit before independence in March 2016 would impose a real crisis for some employers and could put some companies at risk.
“Companies could try and borrow, but that’s not necessarily that easy. Banks would not necessarily lend to some companies. It is an awful lot of money to be sucked out of the corporate sector into pension schemes.”
Concern was also expressed by the National Association of Pension Funds, which represents 1,300 pension schemes and assets of £900bn.
Chief executive Joanne Segars said the announcement had “major implications for pension schemes as part of the debate on independence for Scotland”.
The fact that the European Commission has not changed the rules as expected is seen as a massive blow for the independence campaign.
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