Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • October 2013
10

IFoA seeks clarity on independent Scotland's pension plans

Open-access content Thursday 24th October 2013 — updated 5.13pm, Wednesday 29th April 2020

Actuaries have urged the Scottish Government to set out more details of its plans for spending on the state pension if the country votes for independence next year.

In a commentary on Scottish independence, the Institute and Faculty of Actuaries today said there were a number of questions that could have an impact on provision of financial services in the country if it leaves the UK.

The referendum on Scottish independence will take place on September 18 next year.

Among the issues raised by the IFoA was a call for Holyrood ministers to produce more information on what proportion of government spending would be committed to pensions.

'Whilst the Scottish Government has set out some of its objectives in providing a Scottish state pension, further clarity on what proportion of Scotland's gross domestic product should be made available for pension payments would be welcomed,' the commentary stated.

The paper highlighted that, for the first term of a post-independence Scottish Parliament, the current government had committed to retain the UK government's triple lock. This commits ministers to increasing the state pension by whichever of annual earnings growth, inflation or a 2.5% baseline is highest.
However, the report warned this could lead to reluctance to remove the triple-lock, even if it is necessary to do so. In addition, a period of high inflation could lead to 'unanticipated payments'.

The paper also highlighted Holyrood's commitment to review the UK government's planned increase in the state pension age, which could make other increases difficult to implement.

Although this would be an opportunity to establish a state pension age that reflects the longevity characteristics of Scotland's residents, increasing the age has 'long been a political nettle', it warned.

'There is a danger that a future government would use state pension age as a populist tool to avoid making difficult and unpopular long-term funding decisions

'A delay in accepting the 2026-28 [age] increase may make future increases more difficult to implement, particularly within the early years of a newly independent Scotland.'

The IFoA also highlighted what it called two significant areas of uncertainty in any post-independence settlement: whether Scotland remains a member of the European Union and whether it retains Sterling as its currency, which is the current position of the Scottish Government.

For example, regulation of the Scottish insurance industry after independence needs to be seen in the context of the proposed Solvency II regulations for risk governance and capital adequacy across Europe. 'Again, this emphasises the importance of having clarity with regard to Scotland's relationship with the EU,' the report stated.

Publishing the paper Martin Potter, leader of the Scottish Board at the IFoA said: 'Scotland becoming an independent country would have a significant impact on financial services, including pensions and insurance, the regulation of the sector and its future growth. As an independent professional body with a Royal Charter the IFoA has a public interest duty to uphold. In raising questions that it believes to be pertinent, the IFoA looks to serve the public interest by informing the debate on these important issues ahead of next September's referendum.

'Whether a referendum results in an independent Scotland or not, it is right that discussion about how change could affect Scotland happens now. This paper considers some of the key challenges facing financial services in an independent Scotland.'

 

This article appeared in our October 2013 issue of The Actuary.
Click here to view this issue
Filed in
10
Topics
Pensions

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Life Reinsurance – Client Manager/Senior Manager

London (Central)
£ excellent + bonus + benefits
Reference
143661

Life Actuarial Analyst

South East / hybrid with 3 days per week office-based
£ dependent upon experience
Reference
143660

Investment Associate Consultant

Flexible / hybrid
£ dependent upon experience
Reference
143659
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ