Saturday’s press releases about pensions have been followed up by a detailed policy document. The Scottish Government explains that “For those in Scotland in receipt of the UK State Pension at the time of independence, the responsibility for paying that pension would transfer to the Scottish Government.” What that means, for the State Pension is that
- “The single-tier pension would be paid in full to everyone who reaches State Pension Age after the introduction date and has 35 qualifying years of National Insurance (NI) Contributions or NI credits.
- There would be a qualifying requirement of 7-10 years of contributions.
- All Additional State Pension rights accrued prior to April 2016 would be retained and paid to individuals on retirement.”
It looks as though Scottish Government is thinking of a clean break: a country’s responsibility to pay pensions will be based on a person’s address at the time of independence. Anyone currently in receipt of a State Pension will be passported to the new system. If you worked in Scotland but now live in England, you won’t get a Scottish pension. Conversely, if you worked in England but moved to Scotland, you will. That should mean that there is no such thing, on the first day, as an English or Scottish expatriate; anyone who moves over the Border after retirement will carry with them entitlements from the nation they are coming from, regardless of where the contributions were paid.
The position of people who have not reached retirement age is not so cleanly defined. It’s supposed to be dealt with by a transitional arrangement.
“For those people of working age, who are living and working in Scotland at the time of independence, the UK pension entitlement they have accrued prior to independence would become their Scottish State Pension entitlement.”
To make this work, the Scottish Government needs to know the UK pension entitlement. The records, which are linked to the NI number, are not held in Scotland – they are the responsibility of the National Insurance Contributions Office in Newcastle, which keeps over 65 million National Insurance accounts. The SG would need access to the UK records of most new claimants for the next 35 years. It’s a big ask. (It’s already the case that some functions in benefits administration, such as retrieval from storage, are cross-charged between agencies. I don’t think the SG can assume that the UK government would not cross-charge for the service.)
There are some other issues to resolve.
- The policy documents refers to people ‘living and working’ in Scotland. If someone lives in Scotland but has only worked in England, what happens?
- A person who works for more than 10 years in both countries would meet the qualifying requirement in both. If the total is over 45 years, there is an entitlement to a full pension and enough further contributions to qualify for a partial second pension. Someone who worked in two other European countries might reasonably expect pensions from both. Would two pensions be payable?
- 1.2 million State Pensions are paid to Britons living overseas. Which ones will be paid by Scotland?
- Once payments to expatriates are accepted, can the government legally avoid making payments to expatriates in England?
None of these issues is a fundamental objection to the development of an independent Scottish system – they are examples only of the little knots that can trip governments up. Partly in reaction to the scaremongering about independence and devolution, however, there has sometimes been a contrary tendency to pretend that there are no genuine problems to resolve. In this case, there are.