Scots pensions research

The latest report from National Institute of Economic Social Research argues that postponing a rise to the state pension age in Scotland would be ‘fairer’.

Part of the ‘Economics of Scottish Independence’ series, the findings show how Scotland is disadvantaged by having the same state pension age as the rest of the UK due to a lower life expectancy.

The paper also shows that individual pensions in Scotland would be between six to eight per cent cheaper compared to the rest of the UK. It also estimates that, under current UK schemes, there will be transfer from Scotland to the rest of the UK of nearly £50 million per annum by 2020.

State pension policy is reserved to Westminster. Under current UK plans, the state retirement age will begin to increase to 66 for both men and women from 2018 and to 67 from 2026.

The Scottish Government paper – ‘Pensions in an Independent Scotland’ – recommends that a future state pension age be determined by the Scottish Parliament following recommendations from experts, due to differences in life expectancy.

In 2013 the life expectancy at birth in Scotland was 1.8 years lower for females and 2.5 years lower for males.

Deputy First Minister Nicola Sturgeon said:

“This research makes clear that the lower life expectancy in Scotland means it would be fairer for people here if the increase in the pension age was postponed.

“Indeed, the paper states that the optimal policy for Scotland would be a state pension age relatively lower than the rest of the UK.

“I have already made clear that we are concerned about Westminster’s accelerated timetable for increasing the state pension age to 67. This is now planned to be delivered eight years earlier than originally planned, which unfairly disadvantages Scots.

“We want to make sure that the pension age suits Scottish circumstances – and, on average, people in Scotland have fewer years in retirement receiving the state pension because life expectancy is lower. Independence will allow us to tackle lower life expectancy in Scotland once and for all, but it is not fair for Scots approaching retirement age to suffer in the meantime.

“In the first year of an independent Scotland, we will establish an independent commission to consider the appropriate pace of further change to the retirement age beyond 66, taking account of Scottish circumstances. The commission would report to the Scottish Parliament within the first two years of independence, allowing us to take decisions which best suit the needs of people in Scotland nearing pensionable age.”