The “Better Together” campaigners will be breathing a sigh of relief this morning as the referendum on Scottish independence has returned a “No” vote.
The impact of a “Yes” victory on pensions would have been profound and far-reaching. Concerns were raised during the independence campaign around the lack of clarity on pensions issues. These included the considerable but unknown costs for both public and private sector pension plans, the plans for future state and public sector pension provision, necessary changes for PPF, FAS and NEST, and the impact on automatic enrolment and taxation. Alongside the financial market and economic uncertainties, the biggest concern that would have come out of a “Yes” vote for employers of private sector pension plans was compliance with stringent funding requirements applying to cross-border pension plans if and when Scotland joined the EU. Fortunately for employers (and the pensions industry as a whole), this concern now falls away.
However, the major political parties forming the “Better Together” campaign signed a joint statement in the run-up to the referendum pledging more powers to the Scottish Parliament following a “No” vote. This has been confirmed by prime minister David Cameron this morning. We don’t yet know what powers will be given and when, and how this campaign pledge may now be challenged, and whether any of these increased powers may relate directly to pensions. Time will tell.
It is worth noting in the meantime that the Scotland Act 2012, which is already law, will give Scotland greater powers over income tax from 2016. If Scotland departs from the rest of the UK in terms of income tax rates, this could cause a headache for the auto-enrolment regime and for UK companies operating payrolls north and south of the border. So even without a break up, Scottish affairs will still feature on pension agendas for some time.