The issues presenting today’s (18 September) referendum have proven to be multifarious from the onset, with business leaders and politicians alike concerned about the implications of an independent Scotland for the economy.
Adding to these, the Pensions Administration Standards Association (PASA) today voiced concerns that an independent Scotland would lead to cross-border schemes, presenting administrative difficulties such as differences in tax, regulations and legislation. These issues would prove complex, and could lead to the creation of different scheme registration, administration and scheme funding requirements.
Margaret Snowdon, chair of PASA, said: “This would make it necessary to distinguish between a Scottish and ‘rest of the UK’ status for scheme members, and there are already suggestions that HMRC would need to determine who fits into which category. If members change their status during their working lifetime, this could add further complexity to administering their benefits.”
It is likely that the proposed changes would lead to increased overheads due to the added management and regulation necessary to administer two different registrations. It could also lead to a Scottish version of many UK departments, including the Pensions Regulator, Financial Conduct Authority and Pension Protection Fund.
Snowdon indicated that the state pension age for Scotland might also be different. This could affect automatic enrolment entry requirements, or could lead to radical alterations in the present tax regime.
Ultimately, any moderations to the present system, including increased devolution in the case of a no vote, will lead to increased overhead and administrative cost. For many, this will most likely result in a personal cost through increased cost of services or taxes.
Snowdon said: “Even if there is a no vote, increasing devolution is likely to continue, creating increased differences in the pension rules and regulations from the rest of the UK.”