PPRuNe Forums - View Single Post - Service pension if Scotland were to become independent
Old 25th Jul 2014, 19:48
  #8 (permalink)  
Biggus
 
Join Date: Dec 2001
Location: The Roman Empire
Posts: 2,452
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If I read the Yes campaigns answer to the question put by the OP correctly, then they are proposing (among other things) that an independent Scotland would take on responsibility for paying military pensions for those already retired who are living in Scotland after independence.

The question I have to ask is why? It could open up a can of worms, and there is already a working system in place for paying UK mil pensions to people living in "foreign countries" (as per the person living in NZ in post 5) involving bilateral agreements on such things as where tax is paid. If the OP were to move to Belgium tomorrow, as he is entitled to do as an EU citizen, then his pension would continue to be paid by the UK government in accord with the agreement in place with the Belgian government, this almost certainly involves being paid in £, with the emigrant having to live with fluctuations in exchange rates.

Lets look at a specific scenario, involving the OP (hence known as TD) and his mythical twin invented by me (TD2) living in England who has accrued EXACTLY THE SAME MILITARY PENSION ENTITLEMENT as TD.

Let us say that it is 2019, and Scotland is fully independent. However, due to the lack of a currency agreement between the two governments, the currency in use in Scotland is the Scottish pound (Scot£). While the Scot£ and UK£ started off at 1:1 parity, over the years the Scot£ has come to be worth less than UK£. TDs mythical twin is currently receiving UK£30,000 a year in pension. However, while TD is receiving Scot£30,000, this is now only the equivalent of say UK£28,000. Thus, while TD and TD2 have earned equivalent entitlements, they are not receiving equivalent benefits. The Scottish government has therefore failed to fulfill its pledge, that there will be no difference to individual contribution rates or benefit levels. Would TD be within his rights to take the Scottish government to court over this, no doubt eventually ending in the European court of human rights. Has his right to receive his full pension entitlement been breached?

Does the Scottish government track the Scot£ to UK£ exchange rate and pay TD a different amount each month to compensate him so he receives the same as TD2?

If instead of some form of £, an independent Scotland were to join the Euro, once again would TD be paid a different number of Euros every month as the £ to Euro exchange rate varies to ensure he receives the same entitlement as TD2?

There could also be the situation where exchange rates (whether it be Scottish pounds or Euros to the £) see TD getting effectively a higher pension than TD2, is his income cut in this case?

At the end of the day there is already a system in place that works well for those who are already retired who end up living in a "foreign country". If it ain't broke, don't fix it!






As ever, I may have got the wrong end of the stick, and am willing to be corrected........
Biggus is online now