Research output

Article in Journal ()

Funding pensions in Scotland: would independence matter?

Citation
Bell D, Comerford D & Eiser D (2014) Funding pensions in Scotland: would independence matter?, National Institute Economic Review, 227 (1), pp. R21-R31.

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
pensions; bonds; independence; risk pooling; mortality; yields

StatusPublished
AuthorsBell David, Comerford David, Eiser David
Publication date02/2014
Date accepted by journal31/01/2014
PublisherSAGE
ISSN 0027-9501
LanguageEnglish

Journal
National Institute Economic Review: Volume 227, Issue 1

© University of Stirling FK9 4LA Scotland UK • Telephone +44 1786 473171 • Scottish Charity No SC011159
My Portal