Hostname: page-component-cd9895bd7-gxg78 Total loading time: 0 Render date: 2024-12-25T17:32:53.178Z Has data issue: false hasContentIssue false
  • English
  • Français

Funding Pensions in Scotland: Would Independence Matter?

Published online by Cambridge University Press:  01 January 2020

David Bell ,
David Comerford  and
David Eiser
David Bell*
Affiliation:
University of Stirling
David Comerford
Affiliation:
University of Stirling
David Eiser
Affiliation:
University of Stirling
*
E-mail: d.n.f.bell@stir.ac.uk
Get access Rights & Permissions [Opens in a new window]

Abstract

Economic issues will be key determinants of the outcome of the Scottish referendum on independence. Pensions are a key element of the economic case for or against independence. The costs of funding pensions in an independent Scotland would be influenced by mortality risks, the costs of borrowing and the segmentation of costs and risks (i.e. pricing to Scotland's experience rather than pooled across UK experience). We compare the overall costs of providing pensions in an independent Scotland against the resources that are available to cover these costs. Scotland has worse mortality experience than the UK as a whole, and Scottish government debt is likely to attract a liquidity premium relative to UK government debt. An independent Scottish government would have to create a bond market for public debt. The liquidity premium would make pensions cheaper to buy, but taxpayers or the consumers of public services would have to pay the cost.

Keywords

pensionsbondsindependencerisk poolingmortalityyieldsH10H11H20H21H30H50H72H73H77
Type
Research Articles
Information
National Institute Economic Review , Volume 227 , February 2014 , pp. R21 - R31
Copyright
Copyright © 2014 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Armstrong, A.Ebell, M. (2013), ‘Scotland's currency options’, Centre for Macroeconomics Discussion Paper 2013–2.Google Scholar
Audit Scotland (2011), The Cost of Public Sector Pensions in Scotland, prepared for the Auditor General and the Accounts Commission, February, Edinburgh, Audit Scotland.Google Scholar
Department of Work and Pensions (2013), Benefit and Caseload Tables, Department of Work and Pensions, London, accessed at: https://www.gov.uk/government/collections/benefit-expenditure-tables, Dec 2013.Google Scholar
Lisenkova, K.Mérette, M. (2014), ‘Can an ageing Scotland afford independence’, National Institute Economic Review, 227, pp. R32–9.CrossRefGoogle Scholar
Oates, W.E. (1972), Fiscal Federalism, New York, Harcourt-Brace Jovanovich.Google Scholar
Scottish Government (2013a), Scotland's Future: Your guide to an independent Scotland, Edinburgh, Scottish Government.Google Scholar
Scottish Government (2013b), Government Expenditure & Revenue in Scotland 2011–2012, Edinburgh, Scottish Government.Google Scholar