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
  • April 2014
04

DWP warns on independent Scotland pension costs

Open-access content Thursday 24th April 2014 — updated 5.13pm, Wednesday 29th April 2020

An independent Scotland would face a more ‘acute challenge’ in paying for an ageing population than the UK as a whole, the Department for Work and Pensions warned today

2

Its Scotland analysis paper looked at some of the long-term costs that would accrue to the Scottish Government if current Scottish National Party policies, such as a single-tier state pension of £160 a week, were enacted.

'[These changes] would add further costs that would rise to £210 per working-age person per year in Scotland over next 20 years resulting in a total increased cost of £410 per working-age person per year on pensioner benefits over the next 20 years,' it stated.

Extra expenditure on pensioners in Scotland would rise to around £1.4bn over the next 20 years, it added.

'These are massive spending commitments by any standards. Such expenditure would normally require increases in taxes, cuts in pension/benefit payments, significant reductions in other areas of expenditure or need to be absorbed into a budget deficit,' the report argued. 

It asserted that the current devolution settlement gives Scotland the 'best of both worlds', allowing risks to be shared across the UK but for services to be tailored to local circumstances. 

It added that the current pan-UK labour market, benefit system and pensions arrangements generally works well. This means that, wherever people go in the UK, they receive the same benefits, regardless of the peaks and troughs of local economies, or difference between local populations.

But an independent state would have to set up its own systems and services, the DWP paper said. 

'The unpicking of a complex and integrated infrastructure to pay benefits and pensions would incur costs to develop and set up new systems, while running costs could increase given the loss of economies of scale.'

'The UK faces its own demographic challenge, as the number of working-age people shrinks relative to the number of pensioners, with cost pressures increasing accordingly.

'An independent Scottish state would face a more acute challenge than the UK as a whole, both in terms of the demographic change, and its ability to absorb the impacts from a narrower tax base.'

Commenting on the DWP paper, Martin Potter, leader of the Scottish board at the Institute and Faculty and Actuaries, said the report showed in detail that the UK and Scotland were both facing the challenges of an aging society. 

But he added 'In Scotland, the number of working-age people is projected to increase more slowly than the UK. This means it is likely that pensions for the growing pensioner population will require a greater proportion of government expenditure in Scotland in decades to come.

'The work undertaken by the government, outlined by the paper, offers new data and analysis demonstrating the amount and value of benefits provided to people in Scotland and across the UK.'

This article appeared in our April 2014 issue of The Actuary .
Click here to view this issue

You may also be interested in...

TPR issues first auto-enrolment non-compliance report

The Pensions Regulator today published its first auto-enrolment section 89 report, warning employers struggling to meet their auto-enrolment duties to raise the issue with them sooner rather than later.
Thursday 24th April 2014
Open-access content

GAD rate unchanged ahead of annuity reforms

The maximum income that can be taken from income drawdown and fixed term annuities – the GAD rate – will remain at 3% in May, it has been announced.
Friday 25th April 2014
Open-access content
2

Government urged to scrap 'one-size-fits-all' state pension age

The UK government should scrap the single state pension age and instead allow people to choose when they start to receive it, a report by PricewaterhouseCoopers has said today.
Friday 25th April 2014
Open-access content
2

Ditch tax relief on pensions, says CPS

The government should scrap the tax relief regime on pension contributions and introduce a Treasury contribution of 50p for every £1 saved for retirement, according to a free market think-tank.
Tuesday 22nd April 2014
Open-access content

Budget reforms sparks pensions saving enthusiasm, NAPF poll finds

Over a quarter of workers would now start saving or save more into a pension following the reforms announced in the Budget, according to a poll by the National Association of Pension Funds
Tuesday 29th April 2014
Open-access content

Women's retirement income £6,700 below men's

Women planning to retire this year can expect to receive an annual income more than a third lower than men, according to Prudential research published today.
Tuesday 29th April 2014
Open-access content

Latest from Pensions

ers

By halves

Reducing the pensions gap between men and women is a work in progress – and there’s still a long way to go, with women retiring on 50% less than men, says Alexandra Miles
Thursday 2nd March 2023
Open-access content
rdth

Make My Money Matter's Tony Burdon on the practical power of sustainable pensions

Years working in international development showed Tony Burdon, head of Make My Money Matter, that sustainable pensions can harness trillions of pounds to build a better world – at a scale governments and charities can’t. He talks to Travis Elsum
Wednesday 1st March 2023
Open-access content
KV

Liability-driven investments: new landscape

What now for liability-driven investments, after last year’s crash in the market? Pensions experts Rakesh Girdharlal and Moiz Khan say it should lead to a more balanced approach
Wednesday 1st February 2023
Open-access content

Latest from April 2014

ta filler

Over-55s saving more for retirement, Aviva poll finds

Savings levels for over-55 have vastly improved as they attempt to cushion themselves against the rising cost of living and the fear of not having enough money in retirement, Aviva has claimed today.
Wednesday 7th May 2014
Open-access content

ABI hails 3% fall in car insurance prices

The price of average comprehensive motor insurance fell by 3% in the first quarter of 2014 to £358, compared to the same period last year, according to Association of British Insurers figures
Friday 2nd May 2014
Open-access content
2

Hymans Robertson find cost savings in local government pensions

A review of the Local Government Pension Scheme by actuaries Hymans Robertson has concluded that as much as £660m could be saved through reforms to its asset management regime, including greater use of common investment vehicles
Wednesday 30th April 2014
Open-access content

Latest from 04

ta filler

Over-55s saving more for retirement, Aviva poll finds

Savings levels for over-55 have vastly improved as they attempt to cushion themselves against the rising cost of living and the fear of not having enough money in retirement, Aviva has claimed today.
Wednesday 7th May 2014
Open-access content

ABI hails 3% fall in car insurance prices

The price of average comprehensive motor insurance fell by 3% in the first quarter of 2014 to £358, compared to the same period last year, according to Association of British Insurers figures
Friday 2nd May 2014
Open-access content
2

Hymans Robertson find cost savings in local government pensions

A review of the Local Government Pension Scheme by actuaries Hymans Robertson has concluded that as much as £660m could be saved through reforms to its asset management regime, including greater use of common investment vehicles
Wednesday 30th April 2014
Open-access content
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Pricing Associate

Scotland / England, London
Up to £60000 per annum
Reference
149081

Outside IR35 - Reserving Contract - 6-8 months

London (Central)
Daily rate contract - outside IR35
Reference
149079

Actuarial Analyst - Longevity Reinsurance

England, London
Up to £55000 per annum
Reference
149080
See all jobs »
 
 
 
 

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