LibLink: Alistair Carmichael: SNP pension plans a good reason to stay in UK

So the SNP Government has assured Scots, with all the confidence of a Vote Leave spokesperson saying that there would be £350 million a week for the NHS, that their State Pensions would continue to be paid by the UK Government if Scotland became independent.

Will this persuade older Scots, who overwhelmingly voted to remain in 2014, that independence is worth pursuing? Alistair Carmichael, in a column for the Scotsman, thinks not.

By Blackford’s reckoning, if Scotland secedes from the United Kingdom we can still keep the good bits (like the currency or our pension entitlements) while leaving behind the bad bits (like the taxes that pay for the pensions). The SNP believe that they can reject any responsibility to pay for your pension, but demand that our neighbours to the south cover the tab.

I am no economist. There are others who have outlined far more eloquently than I could the challenges that our people and pensioners would face if the SNP actually tried to embark on this “offloaded pensions” policy – and the harsh spotlight this throws upon the fiscal challenges of secession generally.

He points out an inherent contradiction at the heart of the SNP’s thinking:

It seems more than a little odd that the SNP think that the rest of the UK is simultaneously irredeemable and yet eminently reasonable – made up solely of monstrous, thieving Tories who nevertheless will empty their pockets at the moment of asking. Is this Schrödinger’s United Kingdom?

If anything, such generous and honourable people seem like the kind we should want to keep close.

You might even ask – if our friends in England, Wales and Northern Ireland are so generous with their resources that they will share their pensions with us even after we have left, why would we want to leave in the first place?

It’s not how pensions work, he says:

The whole point of our state pension is that we pool and share resources, geographically and generationally. Your taxes and my taxes do not get stored up in a pot for our pensions years down the line – they are spent in the here and now on the pensions of our fellow citizens, in every corner of the United Kingdom.

We accept that reality on the trust that when the time comes for us to retire, someone else will continue to pay the taxes that will fund our pensions. That chain of trust stretches back in time and can go on into the future – but it relies on a degree of trust in one another to maintain it.

You can read the whole article here.

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13 Comments

  • Brad Barrows 13th Feb '22 - 6:13pm

    Forgive my question but surely the state pension is earned by contributions and continues to be paid out irrespective of whether the pensioner continues to live in the UK. If so, why would Scottish pensioners lose their accrued pension entitlement just because the country they live in no longer be within the UK?

    There are strong arguments for Scotland remaining in the UK but this is not one of them – unless it is believed that generating fear around the pension issue is an effective tactic even though the argument itself is flawed.

  • Peter Chambers 13th Feb '22 - 7:40pm

    When you split a business, the allocation of good and bad bits is documented in a legal text called a ‘carve out agreement’. What have the SNP said about a single list of arrangements of assets and liabilities for independence? If they have not done such a thing then one might say they are offering a false prospectus.
    Also, do they still assume that all of ‘The Oil’ will accrue to them? If so, how would that square with their potential responsibilities in The Climate Emergency.

  • In the event of Scottish independence, for the remainder of the UK to cease paying pensions to current Scottish pensioners would be an illiberal, if not discriminatory act, and I trust that liberals both north and south of the border would oppose it.

  • I think the LDs need to be careful, of course the Scots pensioners who paid their NICs into westminster during the Union government should continue to be paid their dues! Please don’t oppose everything the SNP says and done at the expense of fairness.

  • Peter, I imagine there will be divorce negotiations. The rumpUK will be desperate to offload part of Westminster’s debts into the new nation, and the SNP will be keen to seek reparations and so on. Going forward oil isn’t really going to be an issue, since 2019 Scotland has had enough wind power to more than adequately power its needs, and it’s ramping renewables up big time. England, with a much larger population, is the nation that will struggle to match green promises.

  • Peter Martin 14th Feb '22 - 4:43am

    If England were to leave the UK first, could we expect the rUK to pay our pensions?
    There is no accrued pot of pension money. The elderly are supported by the work of the young and always have been.

  • @Brad Barrows – you misunderstand the system. None of us has an “accrued pension entitlement.” As Alastair says in his article, there is no “pension pot.” Today’s state pensions are funded by today’s taxpayers. If some UK pensioners who live abroad still receive a pension, that’s because they are still UK citizens. Scottish pensioners post-independence would not be UK citizens. Therefore their pension would not be paid by the UK government.
    Incidentally, this reality was fully recognised by the SNP – until last week. Their 2014 white paper explicitly accepted that the Scottish government alone would be responsible for Scottish pensions. There are clips all over the internet of Sturgeon saying it. So this sudden new policy is not only ludicrous but represents a screeching U-turn.

  • True Tony. No matter how much they channel their inner Theresa May – the SNP’s rhetoric shows their position has changed. There is widespread confusion about pensions, which is not unique to Scottish Nationalists, so its easy to see why someone like Blackford (who won’t be relying on a state pension) thinks he can pull a fast one.

    It’s notable that the Growth Commission report, which acknowledged Scotland would need to apply austerity measures post-independence, dropped the commitment to the Triple Lock, so yet more brass neck on display.

    The claim that ex-pats can continue to claim a state pension from “the UK” is a peculiar argument. Assuming pension liabilities are split according to population size, this means that iScot would be responsible for funding about 8% of those expat pensions.

    Meanwhile, logic, and basic fairness, means an iScot government would be responsible for funding the pensions of Scottish pensioners. Same as an iScot would be responsible for funding the NHS and all other benefits nominally funded by National Insurance contributions.

  • TonyH 14th Feb ’22 – 6:49pm…….If some UK pensioners who live abroad still receive a pension, that’s because they are still UK citizens. Scottish pensioners post-independence would not be UK citizens. Therefore their pension would not be paid by the UK government…….

    I’m with Brad Barrows on this– When I lived in France I was told,by the state, that even if took out French citizenship I would continue to receive my UK pension…..

  • If Scotland were to leave the UK then the UK wouldn’t exist in its current form.

    The Scottish population is approximately 8% of the UK population. In broad terms this means that our taxpayers contribute about 8% of the tax that funds UK pensions and gets about 8% in return. There are issues about which areas have the largest working age populations, or pay most tax, or live longer to benefit from state pensions. But the basic principle is Scottish taxpayers currently contribute towards UK (and therefore Scottish) pensions.

    In the event of independence, some nationalists think that Scotland would stop paying towards UK pensions (fair – as Scotland would not be part of the UK), but the rUK (England, Wales & Northern Ireland) would continue to pay for Scottish pensions. How would that be fair? Why would rUK agree to it?

    Why do people like Ian Blackford think they can get away with such obvious nonsense? The answer is, unfortunately, ‘because they can’. Scottish nationalism and Brexit nationalism have a lot in common.

  • Andrew Tampion 17th Feb '22 - 7:35am

    “Forgive my question but surely the state pension is earned by contributions and continues to be paid out irrespective of whether the pensioner continues to live in the UK. If so, why would Scottish pensioners lose their accrued pension entitlement just because the country they live in no longer be within the UK?”
    By that logic pensioners in the rump UK would be entitled to contributions from Scottish taxpayers towards their pensions: in which case what is the point of independence.
    But I agree that what is needed is a positive case for the UK, not another “project fear”.

  • Andrew, in this case it’s less ‘Project Fear’ and more ‘Project Reality’.

    After all, the only reason this came up was because Ian Blackford brought it up by making the nonsense claim. He was challenged, as were others in his party, and instead of saying “Oops, he mispoke”, several of them decided to dig in deeper, all while those who like to shout “Project Fear” insisted that black was actually white and had been white all along. The SNP appeared to have done a full U-turn on a fundamental policy, and should be challenged on it.

    And while I very much agree that more attention should be given towards our cultural ties, I think it’s beyond reasonable to expect those who have spent their entire lives campaigning to set up a brand new country to have a plan for currency, and how to fund the NHS, education and pensions. Not worrying about those things means you are very rich or very naive.

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