Pension Paper leaves more unanswered questions

At the start of this month, during a Scottish Parliament Question Time session, I asked the Scottish Government for details of how it proposed to pay for its pension policy.

I highlighted concerns that the cost of the Government’s pledge to maintain the ‘triple lock’ in an independent Scotland – which would guarantee a minimum annual increase of the state pension of 2.5% – would be costly.

Given previous assertions that the SNP did not envisage personal taxes rising in the event of independence, I asked if the pension age would have to rise to pay for the policy.

The answer I received, like so many questions related to the detail of the SNP vision for independence was that detailed plans would be published in due course.   On Monday, the report on pensions was duly published and the reaction to it has been distinctly lukewarm.

Among the areas considered by the Scottish Government was the state pension age.   The document confirms that in an independent Scotland, the state pension age would increase to 66 by 2020 as with the rest of the UK.   However, they go on to say that the proposed rise to 67 in 2026 could be scrapped and that a commission would consider this question.   This made for blanket coverage that independence would see Scots get bigger pensions earlier.

Like the rest of the document, there is no consideration of how much this potential move would cost but estimates suggest that it could be in the region of £6bn.   That is a big price tag with no indication of how it would be met.

Alongside the lack of costings, criticism has also been levelled at the assumptions made such as to EU cross-border rules.   Under these rules, pension schemes that cross national borders must be fully funded to cover their liabilities.    In an independent Scotland, the pensions that millions of us pay into based in England, Wales and Northern Ireland would become subject to these rules and large existing deficits would have to be cleared.   The SNP assume that negotiations will somehow see rules relaxed for Scotland but that cannot be guaranteed.

Ultimately, the pension paper which promised to answer the big questions over future pensions in Scotland leaves many unanswered.

As an aside, when the Scottish Government ran its initial consultation on the referendum in January 2012, I joined with Labour colleagues to call for the vote to be held sooner rather than later to avoid the issue becoming a distraction from the issues facing our communities today.

The response from the Scottish Government was that given the gravity of the choice facing voters, a long lead in time would allow for debate on substantive issues.  However, here we are, less than a year away from the vote, we have only just heard their pension plans and it will be November before the Government publishes its much anticipated white paper (which incidentally was recently the subject of heavy criticism from the former head of the First Minister’s policy unit, Alex Bell).

In the meantime, the issues affecting people today like unemployment, the health service and the regeneration of our communities are being crowded out by independence and Scotland has been left on pause.

If people are interested in following up the issue further, there are interesting projections in Labour Finance Spokesman, Iain Gray’s, press release from earlier this week.