How will pensions be paid in an independent Scotland?

A Scottish Currency in an Independent Scotland

Olanna — Sat, 06 Nov 2021 18:55:18 +0000

A Scottish Currency in an Independent Scotland Olanna Sat, 11/06/2021 - 18:55

Author or Creator

Yes Southside Dr Tim Rideout

Prediction for potential Scottish currency after Independence.

Scottish salaries will be paid in Scottish Pound. There will be a Scottish State Pension. Scotland will no longer be attached to the Bank of England. Scotland will have a Reserve Bank. Shops will trade in Scottish Pound. Zoom Video 1 Hour 30 mins.

Sources and Links

https://fb.watch/96rn2UkfKq/

Keywords

Currency

Pensions

Scottish Reserve Bank

Payment of pensions

Stephen Richard — Mon, 18 Oct 2021 17:24:37 +0000

Payment of pensions Stephen Richard Mon, 10/18/2021 - 18:24

Author or Creator

Common Weal

National Insurance pensions will continue to be provided by the UK to existing pension holders. This is just as for anyone living in another country now. Separate arrangements will need to be made for those resident in Scotland but not yet in receipt of pensions. This will be a matter of negotiation on how much the UK contributes.

Keywords

Pensions

How small independent countries create a better, more equal society

Stephen Richard — Fri, 05 Nov 2021 12:25:05 +0000

How small independent countries create a better, more equal society

Primary Author or Creator

Believe in Scotland

Stephen Richard Fri, 11/05/2021 - 12:25

Alternative Published Date

2021

Category

Social welfare

Type of Resource

Article

Fast Facts

It has become clear that small, independent countries largely outperform the UK and offer greater security to their citizens. This includes pensions, income distribution and public social spending.

More details

State pension

As we have already shown, the state pension is a gloomy aspect of the UK’s welfare system. So, how much exactly does the UK offer to old age pensioners?

The UK former state pension consisted of two tiers – the basic state pension (£137.60 a week) and an earnings-related additional state pension. The new state pension provides a flat-rate pension worth up to £179.60 a week.

The figures highlight that small, independent countries offer a much greater state pension (including full entitlement) than the much larger UK. Therefore, it’s more likely that an independent Scotland would follow a similar path as its European neighbours. Indeed, the SNP has said that an independent Scotland would work to increase the Scottish state pension to match the EU average, effectively doubling it.

Net pension replacement rate

The net pension replacement rate is another interesting way of analysing and comparing the state pension schemes across various countries.

The Organisation for Economic Co-operation and Development (OECD) defines net pension replacement rate as “the individual net pension entitlement divided by net pre-retirement earnings, taking into account personal income taxes and social security contributions paid by workers and pensioners.”

The net pension replacement rate measures how effectively a pension system provides a retirement income to replace earnings as the main source of income before retirement.

The data demonstrates that the UK’s net pension replacement rate is significantly worse than several of the small independent countries across Europe. In fact, the only country that offers a state pension that constitutes a lower percentage of pre-retirement earnings is South Africa.

Public social spending

Public social spending is another important factor that should be considered when analysing the effectiveness of a country’s social support system. Public social spending includes health, old age, incapacity-related benefits, family, unemployment and housing, among other things.

The figures highlight that, with the exception of Ireland in this case, Scotland’s Northern European neighbours with a similar population size outperform the UK in terms of public social spending. Indeed, both Norway and Denmark spend a significantly great share of the country’s GDP on public social services than the UK.

Income distribution

The OECD provides an Income Distribution database that monitors the performances of countries in the field of income inequality and poverty. This is measured using the Gini coefficient, which is based on the comparison of cumulative proportions of the population against cumulative proportions of income they receive (ranging from 0, in the case of perfect equality, and 1, in the case of perfect inequality). Therefore, with reference to the OECD’s database, we have compared the case study countries of this article.

The data, again, shows several small independent countries across Europe outperforming the UK. Indeed, Ireland, Norway and Denmark all provide greater income equality than the UK.

By analysing these various social support factors, it has become clear that small, independent countries largely outperform the UK and offer greater security to their citizens

Conclusions

This article has drawn upon data from various countries across Europe, including the UK, Ireland, Norway and Denmark. By analysing these various social support factors, it has become clear that small, independent countries largely outperform the UK and offer greater security to their citizens. This includes pensions, income distribution and public social spending. Overall, it can be suggested that an independent Scotland would behave similarly to these small European countries and the Scottish Government has already set out various goals for an independent Scotland to prioritise social wellbeing factors and match European targets.

Resource Address (URL)

https://www.believeinscotland.org/how-small-independent-countries-create-a-bett…

Keywords

social welfare

Income distribution

Public spending

Language English

Lessons for Scotland in how newly independent countries boosted pensions

Stephen Richard — Fri, 05 Nov 2021 12:06:43 +0000

Lessons for Scotland in how newly independent countries boosted pensions

Primary Author or Creator

Believe in Scotland

Stephen Richard Fri, 11/05/2021 - 12:06

Alternative Published Date

2021

Category

Pensions

Type of Resource

Article

Fast Facts

UK state pensions are the least generous in North West Europe in comparison to the average wage.

More details

New analysis shows that UK state pensions are the least generous in North West Europe in comparison to the average wage. The analysis from the House of Commons library shows pensions in the UK are the lowest of our European neighbours as a proportion of pre-retirement wages.

UK pensioners receive around a quarter of the average working wage. In comparison pensioners in Luxembourg and Austria receive 90%.

A recent Believe in Scotland billboard campaign highlighted the fact that UK pensions are the lowest in the developed world as a percentage of final earnings.

Pensions, of course, have been one of the main areas of concern for those still considering whether to vote for independence. So how would an independent Scotland handle its pensions system and how successful is that system likely to be? One way to understand how pensions might be affected is to consider the way in which they have been handled and developed within newly independent countries.

This article will examine a number of newly independent country case studies, including the countries that formed after the collapse of the Soviet Union and Yugoslavia.

USSR

Many of the independent countries that have formed since 1990 were previously part of the Soviet Union. It is important to understand how the pension scheme operated before the Soviet Union collapsed. Four main stages contributed to the development of the pension security system in the USSR:

1) 1918 to 1920s: Introduction of the first Soviet Union social security programmes.

2) 1930 to early 1950s: Formation of the basic features of the social security system.

3) 1956 to mid-1960s: Pension reform.

4) 1970 to 1980s: Minor modifications to the existing system.

With reference to the third stage, a new law concerning state pensions was passed in 1956. This reform extended the coverage of the pension system, increased the benefit amount and reduced the gap between the minimum and maximum pension. On average, old-age pensions rose 100%, invalidity pensions 50% and survivors’ pensions 64%. The largest increases were felt among low-paid workers.

Old-age pensions in the USSR were based on past earnings (recent earnings, rather than lifetime earnings). The basic pension rate depended on the category of work and the level of earnings in the Soviet Union. For example, in 1973 the percentage of current average wage paid in old-age pension – based on current average earnings and 35 years of employment in ordinary conditions – was 55% for a single pensioner and 61% for a pensioner with one dependent.

AFTER INDEPENDENCE

Russian Federation

After the dissolution of the USSR and throughout the early 1990s, the Russian Federation state pension system was similar to the Soviet Union’s system and its general qualifying conditions. However, the law on state pensions in the Russian Federation in 1990 was the first step in changing Russia’s system and instigated the formation of a new type of pension system, fully independent from the state budget of the USSR.

Article 1 of the law stated that labour and its results were the main criterion for differentiated terms and norms in the pension system. As a result only two forms of pensions – labour and social – were created to replace the former multifaceted and multilevel pension system.

The modernisation of the social security system and improved living standards of the most disadvantaged citizens became the fundamental objective of social reforms held by the Russian Federation government

Under this law a new financial institution, the Pension Fund of the Russian Federation (PFR), was also founded to finance pension benefits through insurance contributions, as well as allocations from the state budget. The system is financed from contributions paid by insured persons and employers. The insured individuals pay 1% of their earnings and the employer pays 28% of the payroll. The PFR managed to stabilise the pension system, despite difficult circumstances. Moreover, the number of Russian pensioners grew, as creative workers, clerics, sole proprietors and other working groups who had previously not been included in the national pension system now met the qualifying conditions.

The modernisation of the social security system and improved living standards of the most disadvantaged citizens became the fundamental objective of social reforms held by the government with the direct participation of the Pension Fund of Russia.

Latvia

After its independence from the USSR Latvia started to reform its pension system. This involved an initial reform in 1990. The reformed system retained much of the Soviet pension system qualifying conditions for years after independence.

Latvia currently operates a three-pillar pension system. The first pillar is a Pay as You Go (PAYG), notional defined contribution (NDC) system, the second is a funded mandatory pillar and the third pillar consists of private voluntary occupational and individual pension arrangements.

In this article we will focus on public pensions – the first pillar. Reform of the first pillar took place in 1996 due to low retirement ages, widespread early retirement, the evasion of social security contribution and demographic change. The new system created a strong link between contributions and benefits. Indeed, NDC pension systems offer participants a hypothetical account in which all the contributions that are made throughout their working life are held. At the time of retirement, benefits are calculated by dividing the amount accumulated in the account by the cohort life expectancy.

The new Latvian system has been considered radical and hugely successful. It offers something for all key stakeholders: it exposes what is normally hidden in a traditional pension system, revealing the cost of providing guarantees and benefits. It is flexible and adjusts to demographic and economic changes. This highlights that while the transition of the pensions system may be gradual after independence, it can also be hugely successful.

YUGOSLAVIA

The pensions system in Yugoslavia was based on the PAYG model, in which investment, level of earnings and the duration of insurance determines the benefits of the pension. Since the collapse of Yugoslavia, the countries that constituted this region adopted similar systems.

Croatia

Here the PAYG system was in place until 1998. However, it was clear that it was unable to deal with shocks due to low retirement age, a weak link between contributions and benefits, and the overly generous benefits. As a result, major pension reforms were initiated in a gradual, step-by-step manner. The Croatian government implemented reforms of the PAYG system in 1999 and introduced mandatory and voluntary pension funds in 2002.

The 1999 reform was the first step towards introducing a three-pillar system. That year Croatia reformed public pensions and set out to achieve financial sustainability and cost containment. By 2009 retirement age had gradually been increased, reaching 65 for men and 60 for women. The minimum early retirement age was also raised and the benefit deductions for early retirement were increased.

While the pension system may not suddenly change when a country becomes independent … changes are possible and have brought great successes for many newly independent countries

Slovenia

Slovenia also inherited the legislation of its pension system from the former Yugoslavia and soon after independence initiated its transformation from worker self-management to a modern market economy. Slovenia conducted relatively mild reforms and preserved the old pensions insurance system in which pensions are dependent on earnings and contributions. Indeed, the first pillar of Slovenia’s pension system is based on the PAYG model. Certain significant reforms were established after 2000, including raised age limits and maximum pension restrictions. Slovenia is now one of the richest Central and Eastern European countries and its pension system is very similar to Western European countries.

Across all of these examples, it has been clear that while the pension system may not suddenly change when a country becomes independent, and aspects of its former system may be retained, changes are possible and have brought great successes for many newly independent countries.

Net pension replacement rates

It is interesting to consider the net pension replacement rates in these newly independent countries to see exactly how successful the reforms and pension systems have been. To offer a comparison, we have included the net pension replacement rate of the UK.

Country Net Pension Replacement Rate

Russia 57.0

Latvia 54.3

Croatia 53.8

Slovenia 57.5

UK 28.4

This table clearly highlights a significant difference between the net pension replacement rate of these newly independent countries and the UK. This suggests that the various reforms and new pension systems have benefitted the citizens of these countries.

Conclusions

To conclude, these country case studies have demonstrated that change in pension systems is not always immediate after a country becomes independent and aspects of the former pension scheme may be continued. However, it has also been clear that positive changes and reforms are possible and have benefitted these newly independent countries and their aged population. Therefore, it appears likely that an independent Scotland would manage public pensions successfully and, similarly to other independent countries and would be able to raise the net pension replacement rate to one more aligned to thr rest of Europe.

Resource Address (URL)

https://www.believeinscotland.org/lessons-for-scotland-in-how-newly-independent…

Keywords

Pensions

Language English

Better Pensions

Stephen Richard — Thu, 04 Nov 2021 18:02:02 +0000

Better Pensions

Primary Author or Creator

Believe in Scotland

Stephen Richard Thu, 11/04/2021 - 18:02

Category

Pensions

Type of Resource

News Media

Fast Facts

The UK has the worst state pension in the developed world (defined as full OECD membership). In 2018, it was only worth 28.4% of average income at retirement (based on the net replacement rate). The EU average percentage is more than double that of the UK pension.

More details

The only country who’s data was compared by the OECD to pay a lower net replacement rate percentage is South Africa. A country which is not yet considered a developed nation and has the highest rates of inequality in the world, with more than half the population living in poverty.

Our priorities will be different, we can end pensioner poverty in an independent Scotland. We have asked the leadership of both the Scottish Greens and the SNP to commit to an initial rise from £137.60 per week for the basic state pension to £200 per week, then raising the state pension further to match the EU average as our economy grows with the powers of independence.

Lorna Slater the Co-Leader of the Scottish Green party told us “of course we will, why wouldn’t we”.

And

The 2019 SNP Conference voted in favour of a motion that in an independent Scotland, the Scottish Government should create a plan to increase the Scottish state pension (following independence) to the EU average, effectively doubling it. The 2020 SNP Conference backed a plan to raise the basic state pension to £175.00 per week for everyone but we say that’s still not enough.

Pensions are in danger in the UK as the UK Government is cutting pensions protections and this will make Scottish pensioners about £500.00 a year worse off.

Progress towards matching the European average will have to be achieved through a staged process. We are calling on the Scottish Government to commit to an instant increase in the state pension (in an independent Scotland) to £200.00 a week and then to implement a staged plan of rises till pensioner poverty is eradicated. We have calculated the basic amount a pensioner requires to live with dignity, to afford the right food and to be able to heat their homes is £200 a week – its not enough but it is a start.

Independence will lift the weight of the UK Governments generational economic mismanagement from Scotland and as our economy grows we will be able to continuously improve the state pension over time until reaches an acceptable level.

Independence is the only realistic option if you want to protect pensions and end pensioner poverty. Only through independence can we afford to end pensioner poverty, as its the cost of being part of the UK that is holding our economy back.

Believe in Scotland is the community for people who live in Scotland and who believe that Scotland’s future should be decided by the people of Scotland. We are also Scotland’s most active, most effective, and most successful independence campaigning group.

We support independence, not for politics but for the people, as a means to an end of building a better Scotland.

Keywords

Pensions

Language English

RETIREMENT LIVING STANDARDS UPDATED TO REFLECT EXPECTATIONS CHANGED BY LOCKDOWN

Stephen Richard — Mon, 25 Oct 2021 08:38:15 +0000

RETIREMENT LIVING STANDARDS UPDATED TO REFLECT EXPECTATIONS CHANGED BY LOCKDOWN

Primary Author or Creator

Pensions and Lifetime Savings Associaton

Stephen Richard Mon, 10/25/2021 - 09:38

Date Published

Tue, 10/12/2021 - 12:00

Category

Pensions

Type of Resource

Press release

Fast Facts

State pensions are the lowest in OECD countries.

Resource Address (URL)

https://www.believeinscotland.org/revealed-uks-paltry-pension-cant-provide-even…

Keywords

Pensions

Language English

Revealed: UK’s paltry pension can’t provide even the most basic standard of living

Stephen Richard — Mon, 25 Oct 2021 08:28:18 +0000

Revealed: UK’s paltry pension can’t provide even the most basic standard of living

Primary Author or Creator

Believe in Scotland

Stephen Richard Mon, 10/25/2021 - 09:28

Date Published

Wed, 10/13/2021 - 12:00

Category

Pensions

Fast Facts

The UK state pension is not big enough to support the bare minimum standard of living for a single person, according to a new report. And it warns that a quarter of employees are not on track to be able to afford it.

More details

A report from the Pensions and Lifetime Savings Association gives the information for this headline. It can be accessed here: https://www.plsa.co.uk/press-centre/news/article/retirement-living-standards-updated-to-reflect-expectations-changed-by-lockdown-living

Resource Address (URL)

https://www.believeinscotland.org/revealed-uks-paltry-pension-cant-provide-even…

Keywords

Pensions

Living standards

Retirement

Language English

Revealed: UK’s paltry pension can’t provide even the most basic standard of living

Stephen Richard — Wed, 13 Oct 2021 15:54:18 +0000

Revealed: UK’s paltry pension can’t provide even the most basic standard of living

Primary Author or Creator

Believe in Scotland

Stephen Richard Wed, 10/13/2021 - 16:54

Date Published

Wed, 10/13/2021 - 12:00

Category

Pensions

Type of Resource

Blog

Fast Facts

OECD figures in 2018 showed the UK paid out just 29% of average earnings on pensions. This is the lowest of any developed country. Top of the table were the Netherlands, which pays 100.6% of average earnings, Portugal at 94% and Italy at 93.2%. Blair McDougall - formerly of Better Together - has suggested the UK cannot afford to pay a pension capable of supporting the most basis standard of living for a single person. In fact, he thinks that even the suggestion that the UK can afford it is laughable.

Resource Address (URL)

https://www.believeinscotland.org/revealed-uks-paltry-pension-cant-provide-even…

Keywords

Pensions

Language English

Busting the old Unionist anti-indy myths. Open minds on Scottish independence #19

Stephen Richard — Sun, 10 Oct 2021 10:25:45 +0000

Busting the old Unionist anti-indy myths. Open minds on Scottish independence #19

Primary Author or Creator

The National

Stephen Richard Sun, 10/10/2021 - 11:25

Additional Author(s) / Creators

Believe in Scotland

Date Published

Sat, 04/17/2021 - 12:00

Category

Independence

Type of Resource

News Media

Fast Facts

This article looks at three myths about Scottish independence:

Myth 4: Business leaders are worried about the effects of independence.

Myth 5: A new Scottish currency would be difficult to establish

Myth 6: independence would threaten pensions

Resource Address (URL)

https://www.thenational.scot/news/19239891.open-minds-independence-18-busting-o…

Keywords

Business

Pensions

Currency

Language English

THE IMPACT OF SCOTTISH INDEPENDENCE ON TAX, PENSIONS AND FINANCIAL SERVICES

Stephen Richard — Mon, 04 Oct 2021 18:20:41 +0000

THE IMPACT OF SCOTTISH INDEPENDENCE ON TAX, PENSIONS AND FINANCIAL SERVICES

Primary Author or Creator

Clifford Chance

Stephen Richard Mon, 10/04/2021 - 19:20

Alternative Published Date

August 2021

Category

Taxation

Pensions

Finance

Type of Resource

Assessment report

Length (Pages, words, minutes etc...)

7pp

Fast Facts

The most likely overall outcome for taxation is that rUK would treat Scottish individuals and companies in the same way as it treats any other country's individuals and companies (and vice versa). Scotland will need to establish its own financial regulator and resolution authority and make arrangements for continuing the licences and supervision of Scottish firms. Arrangements for pension investments and payments will be required.

Resource Address (URL)

https://www.cliffordchance.com/content/dam/cliffordchance/briefings/2021/08/the…

Keywords

Taxation

Financial regulation

Pensions

Language English