For some reason the Unionist community has this week been turning the bullhorn up to maximum on the subject of pensions. Most likely provoked by the publication of Dr Craig Dalzell’s fascinating “Beyond GERS”, the usual suspects have returned to the scaremongering tactics deployed during the indyref, attempting to terrorise the elderly with blood-curdling threats of destitution once again.
It’s a bewildering approach, given that the situation regarding pensions is one of the few around independence about which there is known certainty. The UK government already pays the state pension to millions of people outside the UK, under rules which would apply in exactly the same way if Scotland became a “foreign” country.
But just for fun, let’s look at exactly what the situation would be in the monumentally implausible event that Blair McDougall was telling the truth for once.
The claim being made, remember, is that an independent Scotland would have to fund the pensions of all existing pensioners in Scotland – that is, at the moment of independence the rUK would instantly abandon all responsibility for people who have paid their National Insurance contributions to the UK Treasury for their whole lives, and expect the Scottish Government to pick up the tab.
So what would that mean in practice?
(1) There are currently approximately 900,000 pensioners in Scotland. They are all UK citizens, and would remain so after independence. The UK government’s own “Scotland Analysis” paper on the subject in January 2014 said:
(Additionally, there are people of working age who have already paid enough contributions to be entitled to their pension, but aren’t yet actually in receipt of it.)
The legal difficulties in suddenly depriving a million-plus UK citizens of their fully-paid-up pensions – which would almost certainly ultimately involve having to strip them of their citizenship against their will, even though most of them would very likely have voted No and all of them would still be living exactly where they had been before – would be unimaginably immense, and in reality impossible.
(2) To have even a chance of successfully doing so, the rUK government would also have to take away the pensions of all UK expat pensioners living elsewhere in the world. There are currently around 5.5 million UK expats entitled to vote, and while few of them currently exercise that right, any government proposing to take their pensions away might find a sudden spectacular spike in democratic engagement that was not to its advantage. It would be political suicide.
(3) Otherwise, a situation would arise where, say, a 75-year-old woman born and raised in Kent for her entire life who wanted to emigrate and spend her twilight years with family elsewhere would be allowed to retire to Spain or France or Canada or Australia or anywhere else on the face of the planet without losing her pension, but uniquely be forbidden from moving to Scotland on pain of being made penniless overnight.
(4) This would be extra-stupid because governments LOVE it when pensioners retire abroad. They might have to keep paying their pensions, but once someone reaches pension age they’re usually a net fiscal drain on society in countless other ways, especially health, and the cold harsh truth is that governments are glad to be rid of them. As such, anything that discourages them from leaving the country is economically idiotic.
(5) Indeed, it would be likely to create a huge surge in what would effectively if not technically be immigration, as thousands of expensive-to-service UK citizens were forced to flood back into the country because their source of income had been taken away and they could no longer afford to live elsewhere.
It’s an idea so farcical it pains us to even have to be spelling it out. And it should be noted that the UK government has made absolutely clear that it has no intentions of trying to do any of this, because it’s not completely out of its mind.
A couple of weeks before the indyref, an article on the BBC website noted:
Panicking Unionists have tried to focus on the words immediately after the ones we’ve highlighted in that image, claiming that “it might be dished out via the Scottish Pensions System rather than the UK one”, means the Scottish Government would be paying for the pensions rather than just handling the admin of delivering them.
But that’s a self-evidently ludicrous interpretation – the UK government plainly has no power to “agree” to that on the Scottish Government’s behalf. It can only assert that pensions will be honoured if IT is going to honour them, which means paying for them.
(The subsequent paragraph makes that even clearer by saying that the funding will be more complex for “split entitlement” pensioners whose contributions straddle the date of independence than for those already entitled to or in receipt of a state pension.)
And the White Paper (p144) confirms that the Scottish Government will only take over the administration of existing UK state pension entitlements:
The document clearly differentiates between the “UK State Pension” and the “Scottish State Pension” as separate entities, the latter of which people will only accrue entitlements to after independence.
But the White Paper – a policy proposal, not a binding legal document – is really neither here nor there. The finer technical points of split-entitlement pensions will be something for the two governments to thrash out in negotiations, but the arithmetic is straightforward and the international mechanisms for doing so are already in place.
The idea, however, that the UK government could – or plans to – simply walk away from its responsibility to hundreds of thousands of UK citizens to whom it’s already non-negotiably obligated to pay a pension for life is the sort of madness that no sane person would give a moment’s credence to. There’s a good reason that no UK minister has ever actually said any such thing – they’d be torn limb from limb.
That Unionists have now taken it from something that was previously only whispered quietly off the record to frightened old folk on their doorsteps to a public threat is a mark of the terrified desperation that has seized them ever since the Brexit vote. If you thought you’d seen Project Fear last time, readers, batten down the hatches.