The Scottish Government has published the latest in a series of papers on independence, this time on the future of pensions.
One of the most significant public policy challenges for any developed country is the funding of state pensions.
A recent report, by the Institute Of Chartered Accountants of Scotland, was seized upon by the UK Government as evidence of the dire pension provision position Scotland might find itself in. What was misleading was the report made no claim Scotland could not successfully manage pension provision. Rather, it identified questions that need addressed.
Pensions are not an issue for an independent Scotland alone. In April last year, the Office For National Statistics calculated the total UK pension liabilities including public and private pensions. The results are startling: the UK is committed to paying £7.1 trillion to people working or to those retired.
Scotland will remain part of this if it chooses to stay in the UK. A Yes vote in 2014 would secure the potential for Scotland to manage a proportional share of state pension liabilities itself using tax revenues and income streams from pensions assets. There is evidence Scotland would do better than the UK: Scotland currently pays more in revenue to the UK Treasury than it receives. For more than three decades, Scots have contributed 9.9% of total UK taxation but received 9.3% of spending.
The people of Scotland also produce more in tax per capita than the UK as a whole. This situation is reflected in UK state pensions. The Melbourne Mercer Global Pension Index rates Denmark as the best place in the world to be a pensioner. The Netherlands, Australia, Sweden and Switzerland all beat the UK with A or B ratings. The UK is far behind with a C+ rating, alongside Chile.
Scotland's challenge is it has an older population than the UK, a demographic fact that must be addressed. Life expectancy is lower in Scotland than the rest of the UK, meaning state pensions liabilities accruing after independence would be less than the UK average. Combined with a stronger national balance sheet, Scotland is better placed than the UK to begin defusing its share of the UK pensions time-bomb.
There are inevitably other questions surrounding private provision of pensions, defined benefit and occupational schemes; the same questions facing any country including the UK. The risk, therefore, is not whether Scotland as an independent country has a pensions black hole, rather which government, the UK, or Scotland, with adequate control over its own resources, is better able to manage existing, inherited pension assets and liabilities.
The figures suggest Scotland could do better using its advantageous financial position to prioritise paying down public sector pensions deficits while supporting private sector efforts to do the same.
Scotland has produced billions of pounds in oil revenues, yet there is no sovereign fund at UK level from these that may have helped alleviate the taxpayers' burden. That Scotland's oil money has always gone to the UK Treasury, to be spent in its entirety, rather than invested for the future, is a sad indictment of how previous resources have been squandered.
A glance across the North Sea reveals Norway, with the world's largest sovereign wealth fund, invested for the country's pensions and built up from oil revenues, has assets valued at nearly $716 billion invested for pensions.
Below Norway are some 40 other countries, some large like China, some small like Ireland. The UK does not rank on that list.
The continued presence of and investment by oil companies in Aberdeen and offshore suggest there is still more oil, a fact confirmed by the UK Government's own statistics.
The UK has significant economic, political and social problems that can be resolved only with structural change. That change is possible only with the transfer of fiscal powers. A Yes vote is a rare opportunity to move beyond short-termism to a more sustainable future for this and future generations.
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