Any fears over the State Pension are unfounded!
State pensions … instead of saying we paid in – so the UK should pay out, we need a different perspective – follow the money! Simple maths drawn from GERS show the truth.
Do you think that your State Pension is dependent on the UK Government? It isn’t!
Your State Pension is actually provided by everyone in Scotland who pay their National Insurance contributions. This year and every year it is money collected in Scotland that pays your pension!
Is that true? Here are the figures for the past 5 years.
2017-2018 – NI paid in Scotland – £10362m – State Pensions paid in Scotland – £7919m
So more than enough to pay all State Pensions in Scotland!
2018-2019 – NI paid in Scotland – £10643m – State Pensions paid in Scotland – £8154m
Again, more than enough!
2019-2020 – NI paid in Scotland – £11211m – State Pensions paid in Scotland – £8313m
And again, more than enough!
2020-2021 – NI paid in Scotland – £11016m – State Pensions paid in Scotland – £8501m
And yet again more than enough!
2021-2022 – NI paid in Scotland – £12243m – State Pensions paid in Scotland – £8715m
So more than enough to pay all State Pensions in Scotland!
In each of those years (and in past years) the National Insurance paid in Scotland has been sent to the UK Government. The UK Government then control what is paid as the State Pension.
With independence that stops.
What the figures show – as fact – is that the amount raised through National Insurance contributions paid only within Scotland is greater than the amount needed to pay State Pensions in Scotland.
There are many pensioners in Scotland who voted NO because they were (and are) dependent on the State Pension. That was their fear, they were threatened with the loss of that income, and it was all unfounded.
Conclusion: I just hope that it is not just me, but many in the YES movement who will start to show the facts, and they are facts, to many of our pensioners who think that it is the UK who pay their pensions.
It isn’t and never has been!
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The figures used have been taken from Government Expenditure and Revenue Scotland (GERS) 2021-2022 which is a National Statistics publication. It reports estimates of the revenue raised in Scotland and the cost of public services provided for Scotland.
Peter A Bell 
Reblogged this on Ramblings of a now 60+ Female.
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A parsimonious set of accounts containing two items – paid in and paid out with a balance.
A simple message … surely even the would-be leaders of Scotland’s Independence movement can manage that.
Maybe stick it on the side of a bus?
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Excellent campaigning material . Thank you MF & PB
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At last a clear explanation of this subject. What stopped the SNP from saying this? If I remember, they tried to claim that Englandshire would continue to pay Scottish state pensions after independence. Why? when Scotland has more than enough in contributions to pay pensions?
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The UK Government has an outgoing liability for pension payments as confirmed by the DWP during the 2014 referendum. Basically the UK gov collected the revenue and used it to pay pensions in Scotland retaining the surplus. Nothing new there then but after independence they still have that liability, whether the UK and Scottish government agree a lump sum handover to the Scottish Treasury or just continue to pay both by month, they won’t be able to use Scots NI contributions, that will obviously go straight to the SG, that’s a plus of around £11 billion to the SG which can be used to increase pensions in Scotland.
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I’m sorry but I am pretty sure that these figures actually prove nothing, much as I would like them to. The NI contributions are not actually hypothecated against pension payouts, they just contribute to the “pot” of general tax takings. It is true, according to GERS, that NI contributions (employers’ and employees’ ?) made in Scotland do easily cover state pension payouts, but that does not mean that pension payouts are what NI contributions are used for.
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It’s a good way of illustrating the point that we finance our own pensions. If not NI contributions, what figure might we compare directly with the cost of pension provision?
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I agree, but it is easily debunked. a) That is just not how the tax/spend system works b) it relies on GERS numbers and much of this is totally discredited. It is seriously unwise to attempt to support the “pensions will be just fine” case in this way. That was the main point I was making
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There were and still are three prominent issues related to regaining Scotland’s independence (of which you are fully aware) that will play a significant part in influencing how people vote, pensions, currency and the economy.
Think back to 2014 – how well did we do on those issues? How well are we currently doing? Each is on my agenda in posts like this one.
I could even more negatively critique my post, believe me! (*) GERS and deficits etc etc are not for the faint hearted! Your involvement in SSRG will tell you that in spades.
Indeed when Peter asked me why I wanted the link included as part of the post, I answered because there will be a reaction along the lines of ” but what about this or that”. Your post does not – in that context – surprise me.
But as someone I know seeks Scotland’s independence, I am however surprised that you seem to so readily accept the status quo – nothing will change. It is what it is! Really?
Let me start here, with something that appeared in The National recently: ‘Among 55–64-year-olds No was backed by 51% of voters, while the over 65s were the strongest constituency for No with 61% saying they would vote against independence.”
Is that unalterable or are there things we could do to change things?
Then let me add from an exchange I had elsewhere. The poster involved said ” I’m in this age bracket and from my conversations with my peers the amount of pension isn’t a deal breaker (surprisingly). Many of my peers have final salary pensions that cushion them.”
My reply …” there are also those whose sole income is only the state pension, and the “fear” of losing that does affect their decision.”
In those two items is a small part of the target I was aiming for in the post. Take one aspect in isolation and make it as simple to understand as possible.
1) By simplifying two items was it possible to remove the complexity of the whole subject of pensions – not necessarily for those who have a final salary scheme, if you like, but for those who rely 100% on the State Pension, who cannot afford the risk of losing it, and who may be YES to their core, but feel it necessary to vote NO.
I do not know how many would fit in that category but they exist – can we find simple ways of having a conversation with them – or do we just abandon them to their fears? Sorry, it is what it is.
2) You mention hypothecation I would not go that far, but were I a politician who wanted to influence those who needed reassurance, I would say that the “first call” on the National Insurance contributions derived in Scotland will always be the payment of the State Pension to all who live in Scotland. Make it central to any manifesto and explicit.
3) Would such a committment cause imbalance elsewhere – maybe and maybe not – but that is where the pot of taxation comes in to rebalance overall where and if necessary. And there I go into the complications I wish to avoid.That takes us into economics and deficits and that is for another day.
4) Last comment from me – It was the National Insurance Act 1946 which introduced the basic state pension, with effect from 1948, but right from the start it differed from the proposals of the Beveridge Report.
Political considerations made it impossible to implement the fully funded scheme that Beveridge had envisaged because such a scheme made no provision for pensions for those already older individuals who had suffered through the Great Depression and contributed to the war effort.
Faced with the significant immediate bill of paying pensions to individuals who had not made contributions, the government opted to introduce a ‘pay-as-you-go’ system rather than a funded one. “Pay as you go” was the achilles heel and the evidence is there for us all to see.
We have lived with the consequences of that political decision ever since – and as ever it demonstrates that all too often political decisions are made with an eye on the votes that are to be gained or lost – not on the welfare of the people, even when that is what is up for grabs.
An independent Scotland should re-think the whole subject of pensions, and social security, top to bottom, and not just inherit the mistakes of the past.
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Actually the UK gov retains liability for pension payments after independence, confirmed in writing by the DWP during indyref 2014. Basically whatever appears in GERS for pension payments, after independence it’s a plus to the Scottish Treasury. Even if westminster renege on the liability PB is correct, there’s enough revenue generated through Scots NI to cover pensions.
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The UK Government made it clear in 2014 that the responsibility for paying Scottish pensions would rest with the new Scottish Government (had we voted for independence). The problem is an Indy Scotland couldn’t afford the levels of pension payments we receive as part of the UK. That public spending deficit is real!
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For more than a decade now you’ve been told the facts about pensions. How many more decades might it take before you start paying attention to what you’re being told?
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If there’s any ‘facts’ that undermine what I’ve said I’d be delighted to be corrected. I don’t think there are, however.
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You are confused. British state purposefully used the fact that the term ‘pay’ can be understood in two senses to cause confusion among those who are susceptible to being misled. There has been a decade of information being made available to help the afflicted overcome their confusion. But to little avail. It’s one thing the information being available and quite another for people to take the trouble of accessing it when they are convinced they already know all they need to know.
There’s a trick politicians and other snake-oil sellers use to deceive people. It involved telling a version of the facts which, while completely truthful in itself, creates an impression that is far enough from the truth to be called a lie. When the British propaganda machine told you that “responsibility for paying Scottish pensions would rest with the new Scottish Government”, that is true ─ but only in a sense. It is true in the sense that the Scottish Government would be responsible for DISBURSING pensions. But it says nothing about who is responsible for FINANCING pensions. The propaganda relies on people seizing on the first conclusion they come to and then switching off the thinking process altogether.
Only those who, by inclination or training, continued to think about it would realise that it’s not quite as simple as simpler minds suppose. The state may well take on responsibility for the process of transferring monies from the notional ‘pension fund’ to individual pensioners, but this does not necessarily imply that these disbursements are entirely funded from state revenues. Suppose, for example, we lived in a nation whose government had the basic good sense to establish a sovereign wealth fund from an enterprise which, while generally lucrative, was volatile and with a limited life span. Such a fund would, again if the country was governed by sane people, be administered independently of government. Ideally, the notoriously sticky fingers of politicians would not be allowed anywhere near the cash lest it fall victim to one of those accidental transfers to an offshore fund to which politicians seem prone.
The revenues directed to this sovereign wealth fund would not be part of normal state revenues. But the trustees of that fund MIGHT be persuaded to make a one-off contribution to that notional ‘pension pot’. But the sovereign wealth fund would not expect, or be expected, to distribute that money to individual pensioners. They would delegate that task to the appropriate government department.
So, while the Scottish Government is PAYING pensions in the sense of actually putting the money into pensioners’ bank accounts, it is NOT paying all of it in the sense of financing it from its normal revenues.
Many people in Scotland have accumulated pension credits with the UK state. This represents a sovereign liability. The UK state is legally bound to honour those credits. But it would make little sense for the rUK government to pay (disburse) these funds itself. Instead, it would come to a negotiated settlement with the Scottish Government to pay a single lump sum or more likely an annual payment, which the Scottish exchequer would then use would then use to offset its own state pension liability.
It should be obvious that ultimately the Scottish Government would be responsible for paying pensions in every sense. But the change would not be sudden. Rather, the rUK liability would gradually decrease over time as the people with accumulated credits died, while the Scottish Government’s liability would gradually increase as new workers accumulated pension credits solely in Scotland.
I realise that this may be something of an oversimplification. There are various ways the negotiated settlement might go. What there isn’t is any way the British state can avoid its liability. It will be paying (financing) a portion of Scotland’s state pension provision for a considerable number of years. Even if the Scottish Government is paying (disbursing) the pensions.
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I know of no greater advocate, than you Peter, of the fact that confrontation twixt Scotland and the UK must be the eventual outcome.
In response to your post, may I (whilst very concious I am the guest and you the host), posit this scenario:
A UK Government spokesman has been recorded as saying:
” The Government understands that the Scottish Government intends to withhold all future National Insurance contributions collected in Scotland, and will retain these to be used entirely selfishly, in Scotland. We see that as wholly confrontational, indeed as with all matters related to independence, they simply fail to understand the implications of their plans. State Pensions are operated on a “pay-as-you-go” basis, and clearly if you cease to pay, it has consequences, potentially severe consquences. The Government are now considering just what those consequences may have to be for pensioners in Scotland.”
“However, I am pleased to confirm that the Scottish Government do seem destined to fulfil their current committment to make a good-will payment to the UK National Debt. Honouring that committment, involving £bns into the future is exactly the form of non-confontational decisions, we feel we should applaud!”
If confrontation is inevitable, then we must prepare for that to be with a non-benign opponent, who knows to its core that it has everything to lose, and will use every means at its disposal to avoid losing.
I simply suggest that having any faith in rUK meeting its past committments is faith – and I know you do NOT do faith!
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Do you have a source for that quote, Mike? Not that I doubt the veracity. I’d just like a bit more context. It reads like BritNat propaganda from the 2014 referendum campaign.
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Have I misled you? It was a posited scenario, Peter. I wrote as the UK spokesperson.
I was using it as an example of more potential threats – not even actual actions are required- just more threats of that type that create another 2014 position where pensioners believe they are at risk, and where imho we must get ahead of the game by preparing for what can be expected.
And for sure there will be an actual day when iScotland will not send NI payments to rUK – independence – and that scenario and others opens opportunities for the UK to use propaganda (true or false) to cause fear and confusion.
My post suggesting right from the start we take the State Pension on in the manner suggested is to remove threats of that type and nature – in advance – and not be fighting a rearguard action because we didn’t tnink far enough ahead.
To regain our inependence this is one area where I believe we should adopt an attitude from the start of being wholly independent, and not depenendent on others where we have centuries of proof they cannot be trusted.
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I hear spell checkers are free – must get one!
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My apologies, Mike. Not paying enough attention. Multi-tasking is a thing of the past, I’m afraid.
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Ah! So no new facts the! Pensions are paid from current taxation meaning any UK contribution to Scottish pensions would come from rUK taxpayers… Never gonna happen. Sorry. We’d be on our own to fund our own ‘social protection’ and, unfortunately, at a much lower level than we enjoy as part of the UK. ‘Do the math’ as the Americans say.
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I don’t suppose any explanation was going to get past the blinkers of BritNat bigotry. But I tried.
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Calling anyone who disputes your thinking a ‘Britnat’ doesn’t help the Indy cause and just underscores the fact you can’t answer the question.
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Telling people they aren’t helping Scotland’s cause just because they think for themselves helps what?
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You’re confirming the widely held belief that the independence movement is fiscally illiterate, unfortunately.
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Aye. Everybody’s stupid if they don’t see things your way. Aye.
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There’s a reason that there’s a widespread belief that the Indy movement is fiscally illiterate, I’m afraid..
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Fact, qualification for a UK state pension requires only that you make National insurance contributions.
Fact, you are not required to be a British citizen to make NI contributions.
Fact, Your pension will paid to you even if you contribute for a shorter period than the qualifying 35 yrs for a full state pension, the pension will be commensurate to level of contributions made.
Fact, you do not need to remain in the UK to receive your pension, not is there any suggestion that those choosing live to outside the UK would forfeit there pension rights.
Now, I don’t want to rely on the UK paying my pension but neither do I absolve of them of the responsibilty for that pension enforced by UK law on both individuals and employers to make contributions.
I expect the ruk to agree with the Scottish gov a transfer of funds commensurate with the total liability.
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It’ll be a political decision: no UK Government will compel rUK taxpayers to fund Scotland’s pensions. If we leave, it’ll be down to us to find them (at a (lower) level we can afford, sadly.
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Hi … this is an extract from a paper I used to write for, the fact that the DWP “corrected” their original statement (the one used by Alex Salmond in the Scottish Parliament) is still not widely known, but they did, and what they eventually said has importance when you are discussing the State Pension issue – extract follows.
DWP admits ‘misleading’ public on Scottish independence
The Department for Work & Pensions has admitted it misled a member of the public about the value of the state pension in the run-up to Scotland’s independence referendum.
In 2013, the DWP sent out a letter to a constituent of former Scottish first minister Alex Salmond, saying: “If Scotland does become independent, this will have no effect on your state pension – you will continue to receive it just as you do at present.”
The department later said it would investigate whether the contents of the letter had been misleading.
Following a Freedom of Information request, published recently, the DWP has admitted its letter was “misleading and factually incorrect”.
The DWP says: “At the time of the letter, the correct statement was: ‘In the event of independence, state pensions and benefits in Scotland for its citizens would be the responsibility of a Scottish government. Therefore, any questions about entitlements in an independent Scottish state should be directed to the Scottish government.’”
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Mike, I’m all for making the case that pensions will be not only maintained at their current miserable level, but that we should aim to increase them to the average OECD level, because we can well afford to do this. But the argument you make is easily countered and risks furthering the uncertainty. Maybe we should continue this discussion directly because we are both on the same side here.
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Of course it can be countered – I could do it, as I said earlier, but you have to move from the simple to a far far deeper conversation and analysis.
For now, please take my word for this my post elsewhere has allowed many to take a first step into understanding the choices we have, and given them the confidence to believe that we have those choices.
We have already kinda met in the passing, Geoff. I am sure that will happen again and we can chat, happy to do so.
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Except pensions are only one part of ‘social protection’ (which includes pensions but also encompasses welfare and benefit payments of every description). The cost? £26 billion most recently. An independent Scotland would need to raise taxes massively to cover this without the annual public spending subsidy from the UK. If anything, pensions would be cut in an Indy Scotland. We can’t afford them at the current rate.
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The UK has a deficit from the whole social care system including Pensions and Health of around £330 billion, God only knows what a GER for England would look like if it manacaled itself to a budget just determined by NI contributions, which it doesnt. What HMRC does is provide a list of services provided for by the tax revenue generated by NI and PAYE. There’s no split, no breakdown of cost, just a list of services including the state pension. How do they fill the gap, VAT, corporation and business tax etc up to and including borrowing because independent states have the necessary fiscal levers to manage the economy.
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I don’t think anyone was suggesting being manacled to a budget “just determined by NI contributions”. I took it the NI revenue was used simply for illustrative purposes. Just saying Scotland is wealthy enough to afford to pay pensions sounds like mere political rhetoric. It helps if you can put it into manageable terms. An analogy, perhaps.
I’m reminded of the time when Alex Salmond said something about oil revenues being worth some impressive but imaginable sum to every man woman and child in Scotland. He did this because the average person simply doesn’t grasp the immensity of trillions. Not that they don’t know what it means. But it is not meaningful to them. A trillion is not a concept they commonly use. Anybody can dream of being a millionaire. Some may dream of being a billionaire. Very few dream in trillions.
But there is a problem with such abstractions; as Alex Salmond quickly discovered. The British propaganda machine immediately misrepresented his remarks as promising a massive payout to everybody in Scotland after independence was restored. An abstraction only works if everybody understands that it is an abstraction. The British propaganda worked because there will always be some people who don’t.
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Aye , words are chiels that aften ding .
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Except that NI contributions don’t only fund pensions, they help fund the full range of benefits detailed as ‘social protection’ in GERS.
The cost? £26 billion last year and totally unaffordable without the annual public spending subsidy from the UK.
The reality is that an Indy Scotland can’t afford the level of pensions we currently receive as part of the UK meaning cuts (or massive tax rises) are an inevitability should we ever vote for independence.
We’re not too poor to be independent (there’s lots of poor independent countries). We are too poor to enjoy the level of public spending we enjoy as part of the UK however.
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Except NI contributions don’t only go to cover pension contributions but much else too. The full cost of pensions and all other benefits (lumped together as ‘social protection’ in GERS) is £26 billion. Totally unaffordable without the annual public spending subsidy from the UK.
An independent Scotland would have to cut pensions or raise taxes massively.
Worries about pensions ARE well founded. We couldn’t afford them at the UK level.
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One never knows whether what you have said has been read, let alone understood, so I repeat some extracts from my earlier responses.
1) Indeed when Peter asked me why I wanted the link included as part of the post, I answered because there will be a reaction along the lines of ” but what about this or that”.
It is clear that was a correct forecast, and was to be expected. Quite deliberately I confined myself to a narrow subject with only two factors involved – whilst also acknowledging that much wider issues had to be considered – for example when I said ” I could even more negatively critique my post, believe me! (*) GERS and deficits etc etc are not for the faint hearted!”
Why the (*)? It wasn’t a typo. It was the obvious area where I anticipated responses of “what about this or that” would arise. You prove me correct. The link to GERS (very deliberately included) reveals the real depth of issues faced by Scotland, both now and as an independent country, they deserve the most rigorous examination, but as separate issues each in their own right, which is why I said ” There were and still are three prominent issues related to regaining Scotland’s independence (of which you are fully aware) that will play a significant part in influencing how people vote, pensions, currency and the economy.” and also said “Each is on my agenda in posts like this one.”
Either I am right or wrong in believing that there were (and are) pensioners who in fear of losing their sole source of income the State Pension voted NO when had that fear been removed they would have voted YES. It is out of concern for those individuals that my post was addressed – using verifiable figures and facts – namely that the income in Scotland derived from National Insurance contributions is greater than the expenditure on paying the State Pension in Scotland.
2) You mention hypothecation I would not go that far, but were I a politician who wanted to influence those who needed reassurance, I would say that the “first call” on the National Insurance contributions derived in Scotland will always be the payment of the State Pension to all who live in Scotland. Make it central to any manifesto and explicit.
Put more simply remove any fear factor by guaranteeing the continued payment of the State Pension, and allow individuals to decide on their future and their country’s future openly and without fear. No civilised society, no matter the differences over the issues involved should, as an example, be scaring an 80 year old widow into deciding how to vote.
Is that the end of the matter, of course not, it doesn’t even scratch the surface of the much deeper economic issues that must be addressed. Both your responses and those from Geoff lead onto a much broader and crucial set of issues. Can an independent stand on its own feet economically?
Thus my comment “”Each is on my agenda in posts like this one.” I hope when further posts appear on these wider issues it will encourage further discussion, but for now and the rest of today, I am off to Edinburgh as a volunteer live streamer for Independence Live.
I hear Peter is speaking – wouldn’t want to miss that, and if you link in to the Independence Live Facebook page – neither will you.
Saor Alba!… and as best you are able please stop scaring our pensioners! One good deed a day.
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^^^ Should read: Can an independent Scotland stand on its own feet economically?
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The view espoused in Mike Fenwick’s article is supported by Tim Rideout, Scottish Currency Group member, SNP member and esteemed economist.
(https://yoursforscotlandcom.wordpress.com/2022/02/13/well-can-we/)
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And yet little Ireland does. Amply. Odd that.
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Peter. Time to retire from social media. You have lost the plot son!
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I didn’t write the article, fool.
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You know you’re on the right track when the vermin crawl out of their burrows, and attack a helpful article which delivers a simple message to help allay the fear of our pensioners.
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I designed a poster and banner with these facts on back in 2022, based on Tim Rideouts interpretation of these GERS figures. Kevin Hague then chipped in saying that the NI payments also covered other things and that there was a c£700m shortfall which was topped up by the beneficent UK.
Tim Rideout disagreed with this interpretation, as has Craig Dalzell. Unfortunately the water was muddied when The Ferret ran a ‘factcheck’ on the ‘claim’ and stated that it was ‘Mostly False’.
See – https://theferret.scot/national-insurance-pensions-scotland-mostly-false/
This meant the topic just became a ‘you’re lying’ vs ‘no, you’re lying’ debate and I withdrew the design because it appeared contentious.
If anyone can categorically prove that the claim is correct I will be delighted.
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