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ICAS: Questions remain over impact of Scottish independence on pensions

The Scottish government has failed to answer key questions about the impact independence would have on UK pensions, accountancy trade body ICAS has warned.

A referendum asking whether Scotland should remain as part of the UK will be held on 18 September. The prospect of Scottish independence has led to uncertainty about the impact it will have on financial services, particularly pensions.

In its white paper setting out the implications of a “yes” vote, the Scottish goverment set out plans to introduce a £160 a week single-tier state pension for future retirees and create a Scottish version of the National Employment Savings Trust to support automatic enrolment.

However, the Institute of Chartered Accountants of Scotland says it remains unclear who would be responsible for funding “cross border” defined benefit schemes which have a deficit. Under EU law, cross border schemes must be fully funded.

It says the three-year transition period proposed by the Scottish government for schemes to become fully funded is “wholly insufficient”.

The trade body also raises concerns about the feasibility of an independent Scotland sharing the Pension Protection Fund with the UK while also creating its own pensions regulator, and warns calculating state pension entitlements at the point of independence will create “additional complexity”.

ICAS executive director, technical policy and practice support David Wood says: “Important questions remain on how legacy issues will be resolved and new arrangements will be implemented.”

Worldwide Financial Planning IFA Nick McBreen says: “It is a huge concern that there remain serious unanswered questions about the impact of Scottish independence this close to the referendum.”

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