Scottish independence: Pension funds seek answers

Danny Alexander will speak at the pensions conference. Picture: Andrew CowanDanny Alexander will speak at the pensions conference. Picture: Andrew Cowan
Danny Alexander will speak at the pensions conference. Picture: Andrew Cowan
PENSION funds will step up calls for clarity over the implications of independence this week as the industry’s leaders gather for a key conference in Edinburgh.

The National Association of Pension Funds (NAPF) has warned that more answers are needed if its members are able to make informed decisions ahead of September’s referendum.

Its demands follow last week’s intervention in the debate by Edinburgh-based pensions and savings giant Standard Life, whose chairman warned that it would take whatever action was necessary to protect its business and the interests of its four million customers.

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The independence debate is likely to take centre stage at NAPF’s annual investment conference in the capital, which starts on Wednesday.

It comes just three months after NAPF warned in a report on the implications of Scottish independence that pension costs would rise and some schemes would be forced to close in the event of a Yes vote.

NAPF’s members provide 16 million pensions and collectively hold assets worth £900 billion, including £70bn held by Scottish members.

The organisation wants greater clarity from both the UK and Scottish governments over issues including scheme funding, tax and regulation.

“I’m not sure we’re any further forward in getting answers to our questions,” NAPF chief executive Joanne Segars told Scotland on Sunday.

“It’s not for us or our members to tell people in Scotland how to vote but our members face a lot of issues around ­regulation, compensation schemes and scheme funding.”

But it is the funding of cross-border schemes that most urgently needs to be addressed, she added. Under European Union law, pension schemes with members both in Scotland and elsewhere in the UK would need to be fully funded at all times. In the November report, NAPF said such a regime would result in more final salary schemes closing.

“It’s not a can to be kicked down the road because it’s a very complex piece of legislation and changing rules in pensions takes some time,” said Segars.

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“Making sure that pension schemes in Scotland and elsewhere in the UK know about the issues they could face is very important.”

While the conference is likely to be overshadowed by the independence debate, it comes at a pivotal time for the wider pensions industry.

Also on the agenda is automatic enrolment, the reforms under which millions of workers are being shifted into workplace pensions for the first time.

“Nearly 900 people are coming and there’s a lot to cover,” said Segars. “Economically we’re seeing green shoots, but there’s still lots of market uncertainty; final salary schemes are facing serious problems and the issue of annuities can’t be dodged.”

Danny Alexander, the Chief Secretary to the Treasury, is ­expected to cover the impact of the independence referendum when he addresses the conference on the future of pension funds in the UK economy.

Other speakers include ­Larry Fink, chief executive of asset managers BlackRock; Roger Bootle of Capital Economics; Andrew Neil, broadcaster and former publisher of The Scotsman; and David Pitt-Watson, a fellow at London Business School and a campaigner for the reform of pension charges.

The event takes place at Edinburgh International Conference Centre from Wednesday to Friday.

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