What will happen to those already retired and drawing their State Pension from the Department of Works and Pensions; i.e., the Westminster Government? Will these be paid by the Independent Scottish Government?
The Scottish Government’s publication ‘Scotland’s Future’, published in November 2013, clearly states
“We will ensure that current pensioners will receive their pensions as now, on time and in full. All accrued rights will be honoured and protected, and planned reforms will be rolled out, including the single-tier pension.”
Sounds good, particularly when there is also a commitment that..
“Pensioners’ incomes protected with the triple lock so that pensions increase by either inflation, earnings, or 2.5 per cent, whichever is highest.”
The Chancellor, George Osborne, has also committed to apply the same triple lock so that sounds OK.
But, how can we be sure that an Independent Scottish Government will be able to afford such a policy?
There is a wealth of information & analysis from independent experts in finance, law and business to suggest that Scotland’s Sovereign Debt on day 1 as an independent country could be as much as £146 billion (though most likely not denominated in Pound Sterling, nor the Euro); this amount would represent our share of UK debt.
All governments have to borrow money and they do so by selling bonds to investors – these are known as Gilts. It is unlikely that we’ll be able to form a currency union with the UK; even if they agreed, it would be a rather pointless exercise for us to gain independence just to hand back economic AND banking control to the UK!
In our own currency, our credit rating as a new country would not be as favourable as the UK’s. That would mean a much greater cost of borrowing as interest rates would be higher – otherwise investors would not buy our gilts.
Add to that our aging population. There is a higher proportion of people in retirement and approaching retirement in Scotland than in the rest of the UK.
The triple lock on pensions may very soon become unsustainable!
Paying state pension to an ever increasing number of pensioners, without increasing the pension age (as planned by the UK), by a diminishing working population through taxes will be challenging, to say the least.
I am not persuaded that, on just this one question, Independence for Scotland is a viable option.