Pensions in Scotland After independence

OldBeanz

sheslookinhot said:

Preacher64 said:

The 2014 financial white paper produced by John Swinney conceded that there would be insufficient income from tax / NI with Scotland’s working persons demographic, civil service and welfare obligations to maintain the state pension at the rate at that time, and match UK increases going forward. The proposed solution was to support it through taxes raised from oil and gas revenues.

With O&G now fallen out of favour, there is no conceivable way the state pension could be maintained in its current form without massive cuts in other areas of public spending, which could possibly result in means testing. Like the higher tax rates and lower thresholds, this would be proclaimed to be a “progressive policy”.

Of course Mr Swinney also noted that the cost of living was lower in Scotland so pensions could reasonably be reduced without impacting on living standards.

Given that the whole independence movement follows one person’s fixation and desire for sole control over every aspect, it is doomed to failure and would lead to a severe drop in wealth and standard of living for all who remain in Scotland.

EDIT
some information here
https://www.scottishdailyexpress.co.uk/news/politics/snp-pension-deception-laid-bare-26130244

The last place I would seek truth is the Daily Express. All will be revealed when the Independence prospectus is published. 

Can you explain how you arrive at believing that all Scottish people would see a severe drop in wealth and standard of living ?

The Scot Gov produced GERS figures as reported by the highly respected Fraser of Allander Institute give some indication "What is Scotland's deficit 2021?

Scotland's implicit deficit of £16.3 billion in that year would amount to around £2,975 per person, compared with a UK-wide figure of £640 per person (and a rest-of-the-UK figure of £440 per person)."
That and even now we do not have a clear indication of what currency would be used despite this being a contentious issue in 2014.
That the leader of the Westminster SNP thinks that thr rUK would continue to pay Scottish pensions despite these costs being funded on a year to year basis and the Scots would no longer need to contribute.

Preacher64

sheslookinhot said:

The last place I would seek truth is the Daily Express. All will be revealed when the Independence prospectus is published. 

Can you explain how you arrive at believing that all Scottish people would see a severe drop in wealth and standard of living ?

I wasn’t claiming the DE was the pinnacle of British Reporting. Many more sources with the same information can be readily found via Google and is an effective summary of John Swinney’s words.

OldBeanz explained about the running deficit and the cost per head of that. The Scottish tax base could not support the existing welfare bill and all other social spending as it stands and the demographics are worsening. This would suggest either tax rises or massive cuts in public spending to maintain the status quo before we even consider the cost of duplicating the numerous organisations and systems we currently share with the rest of the UK. We have a disproportionately high number of employees who are paid from the public purse rather than raising funds to add to it.

Nicola, with the influence of the Greens, has effectively turned her back on oil and gas at the worst possible time considering the ongoing Ukraine situation and has sold the rights to many of the wind farm installations to foreign countries.

There is a reasonable expectation that the financial sector would take flight to the rUK and it is difficult to see how we could compete to bring in significant inward investment.

Indeed, many of the more realistic Nationalists are now saying that after 40 years of hardship and austerity, an independent Scotland could be as successful as Estonia - see numerous “The National” columns to verify that particular insanity.

The fact that there has been no evidence to the contrary from the SNP eight years after the last referendum to convince voters of the attractiveness of independence, no answers on currency, pensions, defence, NHS, welfare, education etc. should surely raise alarm bells.

The approach now with the “de facto” single issue General Election seems to be “it’ll all be ok and we’ll sort all that out later”. 

It doesn’t make me feel particularly confident that there won’t be a severe drop in the comparative standard of living in my lifetime.

dunstonh

Can you explain how you arrive at believing that all Scottish people would see a severe drop in wealth and standard of living ?

This has to be undisputed.  Scotland spends more per head and is in deficit.   At the moment, it gets a cross subsidy benefit from rUK.   If Scotland leaves the UK, it loses that cross subsidy and will have to find the money elsewhere.      The SNP want to join the EU.    Putting aside that it is unlikely given the land border with England, the EU will not accept Scotland's budget deficit and it will need to be reduced.     Reduction means spending less or raising taxes.

There are also secondary issues.    The SNP say it was silly for the UK to leave the single market as the EU was its biggest trading partner.     Yet the SNP want Scotland to leave the UK, which is Scotland's biggest trading partner.  Distribution of goods in Scotland is more expensive than the rUK.  However, most companies use single pricing models for the UK (except NI).   That will likely go away post-independence.  This will likely increase the costs of deliveries for goods and services.

Two of Scotland's biggest revenue generators are energy (oil and gas) and financial services.  The SNP have already indicated that oil and gas is off their agenda and financial services companies will relocate to England.     You also have smaller but important industries like defence and shipbuilding.    No more UK defence contracts going to Scotland.  

There is also the possibility that Scotland could end up being broken up with some parts remaining in the UK.   The SNP keep saying that they were taken out of the EU against their will and that was wrong.   Most parts of Scotland don't want to leave the UK.  Dumfries and Galloway and the Borders significantly favour remaining in the UK.  You could see a similar situation to Ireland where Scotland becomes Northern Scotland with the South remaining in the UK.  The islands are mostly pro-UK as well.    You could effectively have Scotland facing its own breakaway movement.

Andy_L

Grumpy_chap said:

bostonerimus said:

I think Scotland and the rump UK might well use the current UK/Ireland situation as a model. So anyone who has questions about how the relationship between the UK and an independent Scotland might evolve I'd recommend looking at the current UK and Ireland agreements. 

The UK / Ireland model included a large chunk of the Island of Ireland remaining in the UK.  Which part of Scotland would the SNP consider should remain in the UK to support the justification of the similar type of model?

Any solution around Scottish independence would also need to be in the context of the SNP desire that an independent Scotland would quickly join the EU.  I can't imagine the EU or rUK would be quick to replicate the current RoI / NI arrangements.

The funding of pensions within an independent Scotland would have to accept that, although the state pension is a "contributory benefit" that has always been on the basis of time and there has never been a pension pot accruing from which the state funds current pension payments.  The current payments are only met through current taxation and that would go as a pair to the independent Scotland, unless the SNP  and rUK agreed to a scheme whereby Scottish residents continued to pay rUK taxes set by rUK Government at Westminster with no Scottish representation.  Can't imagine that being amenable to either side tbh.

"The National Insurance Fund (NIF) holds National Insurance Contributions (NICs), paid by employees, employers and the self-employed. ..Receipts paid into the NIF are kept separate from all other revenue raised by national taxes and are used to pay social security benefits such as contributory benefits and the State Pension....
The balance on the Fund at 31 March 2021 was £42.5 billion and was above the estimated minimum requirement throughout the year."

https://www.gov.uk/government/publications/national-insurance-fund-accounts

NedS

Andy_L said:

Grumpy_chap said:

bostonerimus said:

I think Scotland and the rump UK might well use the current UK/Ireland situation as a model. So anyone who has questions about how the relationship between the UK and an independent Scotland might evolve I'd recommend looking at the current UK and Ireland agreements. 

The UK / Ireland model included a large chunk of the Island of Ireland remaining in the UK.  Which part of Scotland would the SNP consider should remain in the UK to support the justification of the similar type of model?

Any solution around Scottish independence would also need to be in the context of the SNP desire that an independent Scotland would quickly join the EU.  I can't imagine the EU or rUK would be quick to replicate the current RoI / NI arrangements.

The funding of pensions within an independent Scotland would have to accept that, although the state pension is a "contributory benefit" that has always been on the basis of time and there has never been a pension pot accruing from which the state funds current pension payments.  The current payments are only met through current taxation and that would go as a pair to the independent Scotland, unless the SNP  and rUK agreed to a scheme whereby Scottish residents continued to pay rUK taxes set by rUK Government at Westminster with no Scottish representation.  Can't imagine that being amenable to either side tbh.

"The National Insurance Fund (NIF) holds National Insurance Contributions (NICs), paid by employees, employers and the self-employed. ..Receipts paid into the NIF are kept separate from all other revenue raised by national taxes and are used to pay social security benefits such as contributory benefits and the State Pension....
The balance on the Fund at 31 March 2021 was £42.5 billion and was above the estimated minimum requirement throughout the year."

https://www.gov.uk/government/publications/national-insurance-fund-accounts

Somewhat misleading, as the "minimum requirement" is set at 16.7%. The actual UK state pension bill for 2021/22 was £101.5 billion, not including contributory benefits.

Scotland's share of the state pension bill was £8.5 billion, and their total welfare budget runs to over £15 billion. To raise £8.5 billion from NI conts alone, each of the 2.4 million working adult in Scotland would have to pay £3500 in NI just to cover state pension costs, which would require the average salary to rise to over £36k per year in Scotland at current rates.

https://www.gov.uk/government/publications/benefit-expenditure-and-caseload-tables-2021

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1035981/benefit-expenditure-by-country-and-region-2020-21.ods

Scotland has a disproportionately high welfare spend and lower tax income that the UK as a whole per head of population, which would have to be funded by increased taxes or reduced spending in Scotland.