The impact on the corporate sector would be devastating if those liabilities were to crystallise and businesses had to rectify massive under-funding on day one; many businesses would become insolvent and the effect on employment levels incalculable.
There is no such thing as a recovery plan in an EU cross-border scheme and annual actuarial valuations would have to be undertaken, instead of triennially.
Splitting the schemes along national lines, in effect expelling the Scottish dimension, would involve considerable actuarial input and expense, and would be of no comfort to small establishments financially dependent on UK groups.
In 2005, UK/Ireland schemes were given three years to comply with funding requirements. Even if a Scottish Government could somehow negotiate similar transitional arrangements, schemes in deficit today generally have recovery plans stretching for ten years or more, and a three-year repair period would impose enormous financial strain.
Nationalist hopes were pinned on the draft Institutions for Occupational Retirement Provisions Directive relaxing those requirements.
Even then, the directive could not realistically be transposed until well beyond an intended independence date in March 2016.
We cannot take for granted that a derogation could simply be negotiated, and now Michel Barnier, European Commissioner for Internal Market and Services, has dispensed with those cross-border funding relaxations, saddling businesses with a major financial headache in the event of independence.
The underlying assumption in the white paper that transitional arrangements are a given, and the assertion that “we will agree arrangements which will provide sufficient flexibility for employers” are now discredited.
West George Street