When Scotland’s accountants enter the referendum debate, Scots sit up and listen. So this week’s Institute of Chartered Accountants Scotland (ICAS) report on pensions in a separate Scotland is significant.
In advance of the SNP’s white paper, last year ICAS published a comprehensive account of the questions which leaving the UK poses for Scots pensions. Just wait for the white paper was the SNP response. Well ICAS did and this is their considered view.
There is something bigger at stake here however than shredded nationalist credibility. Pensions are an insurance policy against poverty in old age. Across the UK for a century we have each paid our share. Sharing risks so that we can all enjoy greater reward. We built this pensions system together across the UK. We all contribute together. Our parents, grandparents and great grandparents helped build a system where everybody from Wick to Walsall can be sure of dignity in retirement. We built it up together over 100 years. Governments come and go but the sharing remains. The Scots, English, Welsh and N Irish people who built this system did so on the basis that we share our resources so that those in need get what they need.
As a United Kingdom we spend far more on the state pension and associated pensioner benefits than in any other area of social security. Last year alone £8bn (Over £6.5million in South Edinburgh alone) was redistributed to our poorest pensioners through Labour’s pension credit and the total redistributed to poor pensioners is almost £75bn since Gordon Brown introduced the top up in 2003.
The UK regulatory architecture protects the pensions of Scots wherever they live across the UK. The Financial Services Compensation Scheme (FSCS), the Pension Protection Fund (PPF) and The Pensions Regulator (TPR) together provide a UK wide firewall for Scots against the loss of pension savings.
The PPF pays pensions to UK workers who otherwise would lose their pension savings when their employer went bust. Just ask the Ayrshire steel workers left high and dry and facing a retirement in penury when Allied Steel went bust. Steel workers who had paid into their pension for a lifetime were suddenly faced with losing everything. Until the PPF stepped in. Or ask the British and Irish workers what happened when Waterford Crystal went bust. While Waterford’s UK employees are protected by the PPF, its Irish workers continue to this day their legal fight to get the pension they paid for and were promised. Every year 16 000 Scots pensions are paid and managed by the PPF.
The UK pensions system, which Scots helped build together with our partner nations, demonstrates why pooling our resources at the UK level is not just sensible, but a statement of our common values. It ensures uniformity of provision for Scots even as the cost of dignity in old age for Scots pensioners whether through illness, disability or poverty associated with illness and disability.
Our system is not perfect nor is the system in any nation; but we work hard together, generation by generation, to improve it. We built it together across these islands. A shared vision sustains the pension system – a shared commitment to a dignified retirement based on sharing our resources in the long term so all can enjoy a dignified retirement. The UK system is built, it is sustainable and it has a broad spread population to support it; a system built through the generations and there for the generations to come. That’s something worth celebrating.