Scotland politics

Scottish independence: Salmond gives 'no difference' pledge on pensions

The first minister said there would be "no difference" to the length of time given for firms to pay off their pension deficits after independence.

Alex Salmond made the pledge to MSPs during First Minister's Questions.

Accountancy experts had warned UK-wide companies who run deficits in their defined benefit schemes that they might have to find millions to pay them off.

Their professional body ICAS suggested three possible solutions that the first minister said would be looked at.

Under EU rules, cross-border pension schemes must be solvent, but deficits are allowed for those schemes that operate within member states.

ICAS, in a report titled Scotland's Pensions Future: What pensions arrangements would Scotland need?, suggested there could be "major cost and cash flow implications for employers" with deficits required to be paid off on the day of independence.

Asked how he would resolve the potential problem raised by ICAS, Mr Salmond replied: "No there won't be a difference or change into the amount of time that companies are allowed to recover."

The SNP leader did not give details of how this would be achieved, but a spokesman later said "you can take it we will go for the most palatable option".

ICAS' three solutions included;

  • splitting schemes up into Scottish and rest of the UK versions
  • having an exemption for existing UK-wide pension schemes
  • or a lengthy grace period for the achievement of full funding on a technical provisions basis.

The accountants pointed to an arrangement agreed between the EU, the UK and Ireland which allowed a three year grace period to "reach full funding levels".

But the report went on: "With many schemes operating with recovery plans spanning 10 plus years, the grace period sought by the business community may be outwith the scope of the Scottish government's discretion in implementing the Pensions (IORP) Directive."

On Sunday, the Scottish government's Finance Secretary John Swinney told the BBC's Sunday Politics Scotland programme: "If you look at the approach the EU takes on a whole variety of different questions, the EU makes provision for longer timescales to be implemented in certain circumstances.

"That is exactly the area that we would explore with the European authorities and the United Kingdom government".

Scottish government officials are currently working on a pensions paper, but there are no details of when it will be published.

The Scottish Conservative leader, Ruth Davidson, accused the first minister of "making it up as he goes along".

She added: "The first minister is clueless on how he would guarantee people's pensions under separation and yet he is willing to gamble the futures of every man, woman and child on his punt to break-up the UK."

Mr Salmond did endorse another conclusion from the ICAS report which was that the Scottish, UK and EU authorities should hold discussions on the issues raised by them.

The number of schemes in deficit which could potentially become cross border schemes in the event of Scottish independence is unknown but ICAS suggested its potential impact could be "substantial".

Related Internet links

The BBC is not responsible for the content of external Internet sites