IN THE intensifying series of conferences and public debates on the independence referendum, the implications for private sector pension schemes are not often raised and when they are, consideration has been cursory.
That is now set to change with a ruling by the European Commission that it will stick to the current regulations and not make private cross-border pension schemes easier and less expensive to operate.
This is a blow to the Scottish Government, which had been hoping that a rule change would help remove at least one uncertainty among the many emerging for Scottish financial sector companies and their customers.
It is even more of a blow for all those employees in defined benefit schemes who could now face extra costs and regulation – and considerable uncertainty – as to the administration of their pension savings.
A cross-border scheme is one in which an employer in one EU country pays contributions to a scheme located in another. In the event of independence, a significant number of UK pension schemes would become cross-border schemes.
It is an EU requirement that such schemes should be fully funded at all times. According to the National Association of Pension Funds, this could result in schemes having to be split up at considerable expense, or members being forced to leave the scheme.
This requirement would involve a significantly more demanding level of funding than is expected of single-country schemes and may require extra contributions from members and/or employees.
The argument that defined benefit schemes are declining to the point of extinction fails to acknowledge that schemes spanning England and Scotland – such as retailers, banks and insurance companies – are expected to continue for many years to come. For all that the EU extols the benefits of the single market, it is notable that very few financial sector products and services operate across borders within the EU.
Cultural, regulatory and tax differences between member states result in customers preferring products and services within their own national boundaries.
The number of cross-border schemes is currently very low, estimated at just 82 last year. This would suggest that there is little appetite for such schemes. In the event of independence, Scotland’s success hitherto as the domicile for pension scheme management would be immediately under question.
Both the industry and the Scottish Government had hoped that the EU cross-border pension rules would be relaxed. Reconsideration should be urged. But the likelihood of any successful outcome in the timescale required looks remote.
It would appear another major uncertainty has entered the referendum debate.
Drug limits send dangerous signals
IN PROPOSING drug-driving limits both for recreational and prescription drugs, the UK government risks what could be widely seen as a legitimisation of illegal drug use. The proposed regime, set to be introduced in the rest of the UK in the autumn, is intended to provide both drivers and the police with greater clarity and certainty as to what level of drug influence constitutes an offence. Such a regime has to ensure a low minimum of such influence without prejudicing the interests of those taking drugs on prescription from their doctor. It is not intended to allow marijuana smokers liberal guidance as to whether they can light up one joint at the wheel or two.
Prior to the introduction of breathalysers, drivers under the influence of drink were able to argue their way out of police attention. The breath test is now widely accepted by the public as a means of measuring a driver’s degree of impairment and removes the reliance on subjective judgment by an officer on the scene.
Now technology has been developed that enables the police to measure the influence of drug consumption on driving behaviour. But there are still issues like the proposed limit for amphetamine in the wake of “significant concerns” to allow patients taking medication for hyperactivity disorders.
It hardly needs to be said that drivers should seek to avoid driving under the influence of drink or drugs of any sort. And while the new limits are designed to offer some allowance for those on medication while deterring “joy riders” in the literal sense, the Scottish Government, when deciding how it will act, should remember that any legitimisation of drug driving is a dangerous signal to send.