Pensions and independence

[BFTD]

Wow, this thread's already showing potential.

Agree with Miguel that the pension question is only relevant to the auld yins, as the state pension will have been wound up by the time the rest of us reach whatever age we're supposed to be able to claim it by. Wonder how many former cabinet ministers will be advisors to private pension companies by then.

[SandyCromarty]

3 hours ago, yoda said:

Using Weimar Germany as an example

 

1st World War Reparations played a massive part in the German economic failure.

The Americans were the Weimar Republic saviour providing major loans and investment to haul them out of the crisis.

btw  Henry Ford was one American investor who later became an admirer and friend of Hitler.

[DMCs]

21 minutes ago, lichtgilphead said:

If we benefit from "free" non-contributory pensions (as you appear to believe), why is my employer taking more than £400 in NI from me every month?

Because it's a tax and he is required to by law. They also have to contribute in NI taxation. That's not going to a fund for you.

[SandyCromarty]

3 hours ago, Dawson Park Boy said:

Sandy - what I think you’re missing is that prior to retirement, Scottish citizens within the UK benefitted from the taxation collected but NOT put into a hypothecated fund as well as English citizens. 

What fund are you referring to? if it is a pension fund?

 There isn't one as our friend DMC has insisted upon, and I think you mentioned the same a few weeks back.

[DMCs]

19 minutes ago, SandyCromarty said:

Can you provide any evidence at all where the uk government has stated that.

I don't have the sources in front of me but there are examples of the British government saying this or relevant Whitehall civil servants saying this.

One thing is that all of this would be subject to post independence negotiations and we don't have a truly relevant historical example to look at.

The UK gov would go in wanting to reduce their liabilities while the Scottish government would go in wanting to avoid taking on as many liabilities as possible.

So it could come down to what each party prioritises in terms of current national debt and current liabilities including state pensions or public sector pensions.

[DeeTillEhDeh]

20 minutes ago, DMCs said:

Many public sector pensions too including NHS DB pensions.

Public Sector pensions have been ring-fenced since 2019 - the real issue with them is that they are almost certainly underfunded.

[lichtgilphead]

20 minutes ago, DMCs said:

Because it's a tax and he is required to by law. They also have to contribute in NI taxation. That's not going to a fund for you.

I was responding to DPB's ridiculous viewpoint in simple terms that I thought he might understand.

I know that I don't have a personal UK pension fund. However, I have paid UK NI contributions for my entire working life, and expect the UK government to uphold their side of the bargain and for me to be paid a state pension on these contributions. I don't particularly care whether it is paid directly by the UK government or whether they reach an agreement to pay the Scottish Government an amount (based upon acturial principles) for their outstanding obligations.

Are you seriously suggesting that the UK government would be willing to renounce the UK citizenship & state pension rights of all citizens resident in Scotland on Independence Day? I don't recall any similar actions being taken when a big chunk of Ireland chose to leave the UK last century.

Edited April 7, 2021 by lichtgilphead

[DMCs]

24 minutes ago, lichtgilphead said:

I know that I don't have a personal UK pension fund. However, I have paid UK NI contributions for my entire working life, and expect the UK government to uphold their side of the bargain.

The issue is that unlike with an employer or private pension there is no "bargain" and you haven't signed anything or agreed on any terms. The state can't simply pass a law and abolish your state pension whenever it wants and there is nothing you can do. This applies to the UK government as well as an independent Scottish government. So it comes to negotiations and management of public opinion or trust. 

24 minutes ago, lichtgilphead said:

I don't recall any similar actions being taken when a big chunk of Ireland chose to leave the UK last century.

This is the most relevant historical example. I don't know what happened there and I can't find any articles on it. Would be interested to find this.

[lichtgilphead]

4 minutes ago, DMCs said:

The issue is that unlike with an employer or private pension there is no "bargain" and you haven't signed anything or agreed on any terms. The state can't simply pass a law and abolish your state pension whenever it wants and there is nothing you can do. This applies to the UK government as well as an independent Scottish government. So it comes to negotiations and management of public opinion or trust. 

This is the most relevant historical example. I don't know what happened there and I can't find any articles on it. Would be interested to find this.

Before I reply, can you confirm that you meant to say "can't" rather than "can" where I have highlighted it above?

[yoda]

54 minutes ago, SandyCromarty said:

1st World War Reparations played a massive part in the German economic failure.

The Americans were the Weimar Republic saviour providing major loans and investment to haul them out of the crisis.

btw  Henry Ford was one American investor who later became an admirer and friend of Hitler.

Thanks for the Standard Grade History lesson, Sandy.

It's not particularly relevant to UK government borrowing or financing pensions in the 21st century, but thank you anyway.

[DMCs]

8 minutes ago, lichtgilphead said:

Before I reply, can you confirm that you meant to say "can't" rather than "can" where I have highlighted it above?

Meant to say can.

[Dawson Park Boy]

One thing we’ve learnt tonight is that this is going to be a very contentious issue if we ever proceed to independence.

Obviously, I hope it doesn’t  arise, but who knows?

Better to be knowledgeable about such matters.

[sophia]

16 minutes ago, Dawson Park Boy said:

One thing we’ve learnt tonight is that this is going to be a very contentious issue if we ever proceed to independence.

Obviously, I hope it doesn’t  arise, but who knows?

Better to be knowledgeable about such matters.

Thanks Archie.

You're absolutely correct, I can't risk my pension and I'm now going to vote for the nice party 

[parsforlife]

1 hour ago, lichtgilphead said:

I was responding to DPB's ridiculous viewpoint in simple terms that I thought he might understand.

I know that I don't have a personal UK pension fund. However, I have paid UK NI contributions for my entire working life, and expect the UK government to uphold their side of the bargain and for me to be paid a state pension on these contributions. I don't particularly care whether it is paid directly by the UK government or whether they reach an agreement to pay the Scottish Government an amount (based upon acturial principles) for their outstanding obligations.

Are you seriously suggesting that the UK government would be willing to renounce the UK citizenship & state pension rights of all citizens resident in Scotland on Independence Day? I don't recall any similar actions being taken when a big chunk of Ireland chose to leave the UK last century.

Taking it slightly out of the independence debate,  you also pay income tax, There’s an expectation that will be used to provide you with healthcare, transport facilities etc. Yet these can be removed or altered depending on how the government feels at any one time.

If  independence is voted for pensions will be part of the overall debate,  but I’d expect they’d be treated the same as education.  One funds the previous generation of working population and the other funds the next one.

 

 

[lichtgilphead]

38 minutes ago, DMCs said:

Meant to say can.

Thought so. It didn't make a lot of sense otherwise.

So, how will the rUK government implement this petty, ill-conceived idea? Let me run a few scenarios by you. Firstly, lets assume that the right to a rUK pension is based on residence:

1. Will my brother (who has spent most of his working life down south) lose his rUK pension if he retires to Scotland, but retain it if he retires to France?
2. Will my current workmates who were born elsewhere in the rUK only get a rUK pension if they return "home" on retiral?

Secondly, insread of residence, lets assume that the right to a UK pension is based on "nationality:"

1. Will all rUK based native Scots lose rights to a rUK pension?
2. In addition to losing pension rights, will they also lose their UK nationality?
3. Will similar measures also apply to holders of other non-rUK passports
4. What about someone who could claim both Scottish & rUK passports?
5. Will all holders of Scottish passports resident in rUK be deported?

As can be seen, it is not in the UK governments interest to clarify the position in advance of negotiations actually beginning. However, they will shout "Uncertainty" (like DPB has done above!) and will tell lies to pensioners again (like Gordon Brown did in 2014)

Obviously, if they do clarify the situation and come out and say "We'll legislate to cut off your pensions and you can't do anything about it" it will result in two things

Firstly, it will show that we are not part of a union of equals, as has previously been claimed

Secondly, it will scupper any negotiations relating to division of all the other assets and liabilities of the rUK. 

As you said before, it will all come down to negotiations. Do you really believe that rUK would resort to the bully-boy tactics that you suggest above and, if you do, do you really want to be part of a country that would act in such a manner?

With regard to the Irish situation, there wasn't really much in the way of a state pension in the 1920's (notwithstanding the Old Age Pensions Act of 1908) The National Insurance Act took effect from 1948.

However, citizens of Eire retain various UK rights that are not available to most other passport holders. In addition, Eire started with a clean sheet - in simple terms, they did not get a share of the assets, but did not take on the liabilities.

So, can we agree that if rUK removes entitlement to pensions etc, and negotiations break down due to the rUK 's petty refusal to honour pension promises, then Scotland can refuse to take any share of rUK liabilities?

I n conclusion, I suspect that the scenario you set out (i.e. that rUK will remove our rights to pensions on Indy) is highly unlikely, and impossible to put intp practice. The fact that it will also disadvantage tens of thousands of rUK citizens currently resident in Scotland is unlikely to be a vote winner either, especially if they have to sell up their retirement homes to move South to collect their pensions.

 

[wirez]

21 minutes ago, lichtgilphead said:

Thought so. It didn't make a lot of sense otherwise.

So, how will the rUK government implement this petty, ill-conceived idea? Let me run a few scenarios by you. Firstly, lets assume that the right to a rUK pension is based on residence:

1. Will my brother (who has spent most of his working life down south) lose his rUK pension if he retires to Scotland, but retain it if he retires to France?
2. Will my current workmates who were born elsewhere in the rUK only get a rUK pension if they return "home" on retiral?

Secondly, insread of residence, lets assume that the right to a UK pension is based on "nationality:"

1. Will all rUK based native Scots lose rights to a rUK pension?
2. In addition to losing pension rights, will they also lose their UK nationality?
3. Will similar measures also apply to holders of other non-rUK passports
4. What about someone who could claim both Scottish & rUK passports?
5. Will all holders of Scottish passports resident in rUK be deported?

As can be seen, it is not in the UK governments interest to clarify the position in advance of negotiations actually beginning. However, they will shout "Uncertainty" (like DPB has done above!) and will tell lies to pensioners again (like Gordon Brown did in 2014)

Obviously, if they do clarify the situation and come out and say "We'll legislate to cut off your pensions and you can't do anything about it" it will result in two things

Firstly, it will show that we are not part of a union of equals, as has previously been claimed

Secondly, it will scupper any negotiations relating to division of all the other assets and liabilities of the rUK. 

As you said before, it will all come down to negotiations. Do you really believe that rUK would resort to the bully-boy tactics that you suggest above and, if you do, do you really want to be part of a country that would act in such a manner?

With regard to the Irish situation, there wasn't really much in the way of a state pension in the 1920's (notwithstanding the Old Age Pensions Act of 1908) The National Insurance Act took effect from 1948.

However, citizens of Eire retain various UK rights that are not available to most other passport holders. In addition, Eire started with a clean sheet - in simple terms, they did not get a share of the assets, but did not take on the liabilities.

So, can we agree that if rUK removes entitlement to pensions etc, and negotiations break down due to the rUK 's petty refusal to honour pension promises, then Scotland can refuse to take any share of rUK liabilities?

I n conclusion, I suspect that the scenario you set out (i.e. that rUK will remove our rights to pensions on Indy) is highly unlikely, and impossible to put intp practice. The fact that it will also disadvantage tens of thousands of rUK citizens currently resident in Scotland is unlikely to be a vote winner either, especially if they have to sell up their retirement homes to move South to collect their pensions.

 

This is spot on.

Anyone in the EU, or the huge list of countries with reciprocal agreements; can claim a state pension from the UK if they have worked in the UK, met the number of qualifying years and yes even if they then decided to head back home.

The UK Government have already stated they would be the continuing state after independence.

The idea that someone who has paid their stamp all their working days is suddenly not going to receive their (shite) UK state pension is laughable.

[coprolite]

3 hours ago, lichtgilphead said:

I was responding to DPB's ridiculous viewpoint in simple terms that I thought he might understand.

I know that I don't have a personal UK pension fund. However, I have paid UK NI contributions for my entire working life, and expect the UK government to uphold their side of the bargain and for me to be paid a state pension on these contributions. I don't particularly care whether it is paid directly by the UK government or whether they reach an agreement to pay the Scottish Government an amount (based upon acturial principles) for their outstanding obligations.

Are you seriously suggesting that the UK government would be willing to renounce the UK citizenship & state pension rights of all citizens resident in Scotland on Independence Day? I don't recall any similar actions being taken when a big chunk of Ireland chose to leave the UK last century.

If the uk is splitting in two, then the two constituent parts should share a proportion of the obligations of the previous Uk.

So Scotland should take on 1/12 of the obligations to pay the pensions of all former UK citizens and rUK 11/12.

So we'll owe 1/12 of 11/12 of future liabilities and be owed 11/12 of 1/12. So we could pay each other £50bn each, or pay fractions of everyone's pensions. Or we could just call it quits. 

[Dawson Park Boy]

I think everyone is maybe over complicating things.

Everyone who has paid into the UK state pension system will receive their due entitlement, of that I am certain wherever they reside.

I think those who emigrate e.g. Canada get their pensions at the rate when they left but don’t get increases. That certainly used to be the case.

The question is - which government picks up the tab?

From the point of view of Scotland, as a new state with a ? currency and no track record on international markets, the last thing it wants is huge liabilities for future pension payments. That will be a matter for negotiation.

[SandyCromarty]

12 hours ago, DMCs said:

I don't have the sources in front of me but there are examples of the British government saying this or relevant Whitehall civil servants saying this.

One thing is that all of this would be subject to post independence negotiations and we don't have a truly relevant historical example to look at.

The UK gov would go in wanting to reduce their liabilities while the Scottish government would go in wanting to avoid taking on as many liabilities as possible.

So it could come down to what each party prioritises in terms of current national debt and current liabilities including state pensions or public sector pensions.

1 - So your statement that the uk government would illegally refuse to pay out pensions to Scots, which they had contributed to, on Independence is just rumour and hearsay.

2 - Brexit separation negotiations for a start, and historically the negoiations and compensation agreed upon by the uk government when handing back colonies,           Hong Kong being the most recent.

3 - You're stating the obvious.

4 - Ditto.

Lets leave it at that.

Edited April 8, 2021 by SandyCromarty

[DMCs]

10 hours ago, lichtgilphead said:

Thought so. It didn't make a lot of sense otherwise.

So, how will the rUK government implement this petty, ill-conceived idea? Let me run a few scenarios by you. Firstly, lets assume that the right to a rUK pension is based on residence:

1. Will my brother (who has spent most of his working life down south) lose his rUK pension if he retires to Scotland, but retain it if he retires to France?
2. Will my current workmates who were born elsewhere in the rUK only get a rUK pension if they return "home" on retiral?

Secondly, insread of residence, lets assume that the right to a UK pension is based on "nationality:"

1. Will all rUK based native Scots lose rights to a rUK pension?
2. In addition to losing pension rights, will they also lose their UK nationality?
3. Will similar measures also apply to holders of other non-rUK passports
4. What about someone who could claim both Scottish & rUK passports?
5. Will all holders of Scottish passports resident in rUK be deported?

As can be seen, it is not in the UK governments interest to clarify the position in advance of negotiations actually beginning. However, they will shout "Uncertainty" (like DPB has done above!) and will tell lies to pensioners again (like Gordon Brown did in 2014)

Obviously, if they do clarify the situation and come out and say "We'll legislate to cut off your pensions and you can't do anything about it" it will result in two things

Firstly, it will show that we are not part of a union of equals, as has previously been claimed

Secondly, it will scupper any negotiations relating to division of all the other assets and liabilities of the rUK. 

As you said before, it will all come down to negotiations. Do you really believe that rUK would resort to the bully-boy tactics that you suggest above and, if you do, do you really want to be part of a country that would act in such a manner?

With regard to the Irish situation, there wasn't really much in the way of a state pension in the 1920's (notwithstanding the Old Age Pensions Act of 1908) The National Insurance Act took effect from 1948.

However, citizens of Eire retain various UK rights that are not available to most other passport holders. In addition, Eire started with a clean sheet - in simple terms, they did not get a share of the assets, but did not take on the liabilities.

So, can we agree that if rUK removes entitlement to pensions etc, and negotiations break down due to the rUK 's petty refusal to honour pension promises, then Scotland can refuse to take any share of rUK liabilities?

I n conclusion, I suspect that the scenario you set out (i.e. that rUK will remove our rights to pensions on Indy) is highly unlikely, and impossible to put intp practice. The fact that it will also disadvantage tens of thousands of rUK citizens currently resident in Scotland is unlikely to be a vote winner either, especially if they have to sell up their retirement homes to move South to collect their pensions.

OK let's disambiguate two things here. According to UK law it is illegal to change the terms of current pensions i.e. once a pensioner has reached State Pension Age that pension actually does become his property which he is legally entitled to. For those people, I believe it's quite a large number up to maybe 1m Scots, we can safely assume that their pensions would not be reduced or stopped BUT we don't really know who would pay it and that would be down to negotiations between Scotland and rUK. Ultimately it could be anywhere from 100% ScotGov paid to 100% UKGov paid.

In terms of current workers you're still making the mistake of using terms such as "pension rights" which is not the way to think about it. You don't have a "right" to a state pension until you get it i.e. by reaching SPA. Before then it can be changed, improved, removed, etc. by Parliament at will. The same would likely be the case for Scottish government pensions in the event of independence. This has been confirmed legally on quite a few occasions including in the 2002 "Frozen Pensions case" and also by the European Court of Human Rights in 2008. I've attached the ECHR judgement. 

In light of this it's clear that those future pensions would be the sole responsibility of an independent Scottish government. There is no reason why they could not count up the years working and in either UK or an indy Scotland for their final payout. Ultimately that would be up to the Scottish Parliament. They could have a much simpler system or a system more similar to Germany (where contributions matter much more) that they would potentially phase in.

Chamber judgment Carson and Others v. the United Kingdom 04.11.08.pdf