Pensions and Independence

We recently held an debate on the Scottish Referendum in Glasgow and one on the main concerns arising was that of pensions after independence…

Pensions are an extremely important issue for older people, but they are also a highly complex area. When added to the inherent uncertainty and partiality which pervades the independence debate, it’s not surprising that older people may struggle to get the grasp they want on what independence might mean for them.

The Scottish Government’s own white paper on pensions and independence published last September, and further details appeared in the referendum white paper Scotland’s Future published in November. Age Scotland wrote about this last year.

The Scotland Office and the Department for Work and Pensions (DWP) published the latest in the UK Government’s Scotland Analysis series on Thursday 24 April. It relies on an analysis of current pensions and benefits spending both in Scotland and across the UK, and long-term projections of how these might change in future based on demographic trends. It also factors in the proposed changes which the Scottish Government wants to make to pensions and working-age benefits if there is a Yes vote in September.

The UK Government’s analysis is that Scotland already gains £60 more per head of population per year in welfare spending than the rest of the UK, and that an independent Scotland would face higher pension costs per head of population – up to £450 extra per person per year. Despite Scotland’s lower life expectancy – which makes pensions more affordable if people die earlier – they claim that Scotland’s overall spend on welfare would cost it an extra £1.4 billion per year by 2035 – 8% more than is currently spent here.

There would also be costs in setting up and maintaining the infrastructure needed to run an independent Scotland’s own social security system. An independent Scotland might not automatically gain all of the UK Government’s assets in Scotland – such as the network of JobCentres – or take on public pensions staff working in Glasgow and Dundee. And the UK-wide IT system is based on consistent benefit structures, payment levels and eligibility tests. If an independent Scotland wanted to change these – and the Scottish Government certainly does – then there could be substantial set-up costs which Scotland would have to find.

The UK Government claims the Scottish Government should tell people how these costs would be afforded. The Scottish Government rejects the analysis as either incorrect or exaggerated.

Older people simply want to know what independence might mean for their standard of living, so it can inform their vote. So the continual arguing over the facts can be both frustrating and confusing. Age Scotland will continue to try to help to inform the debate, and we will be publishing responses from the two campaigns to questions we posed them in the next issue of Advantage magazine and on our website, But with certainty an unlikely prospect, older voters might be left wondering which version of events seems more likely and whom they are more likely to trust.


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