Thinktank delivers a ‘hammer blow’ to the independent SNP pension scheme

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Thinktan delivers a ‘hammer blow’ to the SNP’s independent pension scheme

The SNP’s claim that the state pension would be paid at the same rate under independence as in the Union has been directly challenged by one of Scotland’s leading think tanks.

A paper published today by the Fraser of Allander Institute says past contributions to Scottish Workers’ National Insurance cannot be taken as a guarantee of future rights.

“As individuals have no ownership rights over their past contributions, the UK government can change eligible state pension entitlements as it sees fit,” it says.

He said pension deals between Scotland and the rest of the UK would have to be negotiated after a yes vote and that it was likely London would say the current policy was ‘not relevant’ given the unprecedented change.

Opposition parties said the analysis, after a series of senior SNP figures this week stressed the continuity of state pensions under independence, was a ‘hammer blow’ for the Yes cause .

SNP Westminster leader Ian Blackford told ITV Border that the rest of the UK will have an “obligation” to pay the pensions of those who have paid National Insurance (NIC) contributions.

He said: “You pay into a national insurance fund, and the UK is responsible for paying that, but it’s a UK pension entitlement – no ifs, no buts, about that. “

On Thursday, Nicola Sturgeon said ‘those with accrued rights would continue to receive current levels of state pension in an independent Scotland’.

She told MSPs during Prime Minister’s Questions that ‘people won’t notice any difference’, or even get a higher pension than before.

But economist David Eiser, a fellow at the Fraser of Allander Institute, and David Bell, professor of economics at the University of Stirling, argue in today’s article that the situation is “both more complex and more uncertain” than both sides of the constitutional divide claim.

First, they point out that state pensions “are not paid out of a ‘pot’ that individuals accumulate while on leave from work”, but are “a pay-as-you-go scheme” paid from tax revenues and current borrowings.

‘The state pension is simply a benefit which the UK government could reduce, or even in principle eliminate,’ they write.

At present the UK government pays the state pension to people who have paid NICs in the UK even if they retire overseas, and the SNP says the same would happen after the independence for those who had paid enough NICs.

However, the authors say it would be part of wider negotiations around the allocation of assets and liabilities in general, and that the final agreement was “impossible to anticipate”.

They say: “The UK Government is likely to argue that the succession – and the massive transfer of the UK tax base to the Scottish Government – constitutes an unprecedented change in circumstances which renders comparisons with the treatment of individuals in under current state pension policy irrelevant.”

Ms Sturgeon said she wanted Indyref2 by the end of next year, Covid permitting, and ordered officials to update the Independence White Paper given to voters ahead of the 2014 referendum.

Scottish shadow secretary Ian Murray said: “This intervention is a hammer blow against the SNP’s fanciful economic plans for independence.

“Fraser of Allander’s independent analysis makes it clear that Ian Blackford spoke through his hat and that the SNP are more than happy to gamble the pensions of Scots on the independence table.

“Unlike the SNP, Scottish Labor will always stand up for the financial security and stability of the people of Scotland.

“It’s high time he and his ragtag team stop trying to mislead the public with their unicorn flyer and get on with their day job.”

Tory MP Donald Cameron said: “Ian Blackford’s insistence that pensions in an independent Scotland would be paid for by British taxpayers is complete nonsense.

“The SNP are trying to fool the Scottish public into believing a fantasy version of independence, as this analysis reveals the chaotic reality we might expect.

“The fact is that the UK would have no obligation to pay Scottish pensions if the country left the UK – as the SNP should be well aware.

“Nationalists admitted in their own 2014 white paper that pensions would be the responsibility of an independent Scotland – either they have become even more out of touch with reality in the years since, or they are deliberately misleading the Scottish public into error.”

Scottish Liberal Democrat finance spokesman John Ferry added: ‘Ian Blackford is living on another planet if he thinks Scotland’s pensions will be paid for by a foreign government should he and his party succeed to break up the UK.

“On pensions, borders and currency, we are seeing a series of increasingly desperate bets from the SNP. It is amazing that a party that has spent decades obsessing over separation has so little answers on how to get there.”

An SNP spokesman said: ‘The UK government confirmed in 2014 that after independence people would be entitled to the pension contributions they had paid into the UK system.

“Independence will also give us the opportunity to provide significantly better pensions than are currently available, given that the UK has a public pension that lags behind many neighboring European countries and other developed countries.”

The Fraser of Allander Institute will publish the article on its own website at noon today, but Herald readers can see it here first.

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