THE UK’s universities will face a £10 billion pensions funding crisis if Scotland votes Yes in next year’s independence referendum, it was claimed yesterday.
University pension fund managers are implementing a ten-year plan to eliminate the deficit, which involves institutions making higher contributions. However, the delay would not be permitted if Scotland left the UK and joined the EU, thanks to European regulations that are much more stringent for international pension schemes.
A spokesman for the Universities Superannuation Scheme (USS), which has a £9.8bn shortfall, said there would be “considerable implications for the scheme” if Scots voted for independence next year.
Lord Hutton, who chaired a commission into the UK’s public sector pensions, told The Scotsman the shortfall would be a “major headache” for occupational pension schemes.
The Labour peer, a former work and pensions secretary, also warned that the pensions of tens of thousands of university workers could be at risk due to the black hole in finances.
Lord Hutton said: “If it’s true, it would represent a very serious problem for university pensions and tens of thousands of people with pensions could be at risk.
“If there was a £10bn deficit, it’s extremely difficult to see how it could be addressed and it would be a major headache.”
A USS report and accounts for 2011-12, the most recent available, state that pension fund managers have agreed a ten-year recovery plan with the universities and the University and College Union, representing staff.
A USS spokesman said it was too early to predict the precise implications but confirmed: “If there is a vote in favour of independence in September 2014, there may well be considerable implications for the scheme.”
UK government poverty “tsar” Frank Field warned an independent Scotland would be “more vulnerable” to a collapse of the pension deficit repayment plan. Mr Field, a former welfare reform minister, claimed the rest of the UK would not be affected by the shortfall.
He said: “Scotland would be more vulnerable because it’s smaller, whereas the rest of the UK would be in a stronger position financially as a bigger entity within Europe.”
A spokeswoman for finance secretary John Swinney insisted the deficits were “nothing to do with independence”.
She said: “Pension deficits are an issue for the UK as a whole and the UK already has measures in place for cross-Border schemes to ensure there is no impact on pensions. The payment of benefits which have accrued in existing private sector pensions would continue in an independent Scotland.”
Labour shadow pensions minister Gregg McClymont said the USS findings showed that UK occupational pension schemes would have to find billions of pounds “overnight” in the event of a Yes vote.