The European Commission has decided not to introduce regulations that would have made private pensions cheaper to operate across international borders.

In a surprise move, the Commission has decided to stick to the current regulations.

If Scotland votes for independence in September, many private pension schemes would become cross-border schemes.

The pensions industry has said the decision could make these schemes more expensive to run.

The Commission had been expected to relax the regulations, so the schemes would not have to be fully funded all the time.

Joanne Segars, chief executive of the National Association of Pension Funds, said: “Today’s announcement of a new EU pensions directive has major implications for pension schemes as part of the debate on independence for Scotland.

“The big surprise is that the EU will continue to require cross-border schemes to be fully funded – a significantly more demanding level of funding than is expected of single-country schemes.

“The European Commission had been expected to relax these special cross-border requirements, but it has disappointed many observers by leaving this part of the pensions directive unreformed.

“The knock-on effect of this is that schemes with members both north and south of the border would become much more expensive to run if Scotland were to vote for independence.”

‘Considered in detail’

A spokeswoman for the Scottish government said ministers had “considered in detail the impact of EU rules on defined benefit pension schemes” and set out their view in the White Paper on independence, published last November.

The spokeswoman continued: “We clearly set out our view, informed by practice in Ireland under the current regime, that a scheme which became cross-border on independence should be allowed to implement its existing recovery plan in accordance with the period originally set for it, rather than having to achieve full funding over a much shorter timescale.

“This remains the case, regardless of the fact that that the Commission has deferred plans to encourage the growth of cross-border schemes by relaxing the funding regime.

“The Scottish Government has repeatedly pressed the UK to discuss this issue and to instigate formal talks with the Commission.

“Relaxation of the cross-border funding rules is supported by the industry across Europe. We will be working with partners to demonstrate the case for action on this important issue when the new Commission takes office later this year.”

‘Funding black hole’

Speaking for the pro-Union Better Together campaign, Labour MP Gregg McClymont said: “The pensions system in the UK works well through the pooling of resources, where the rewards are shared via sensible and efficient risk sharing.

“This protects the pensions of Scots who have worked all their lives to enjoy retirement.

“The EU has today confirmed that Scottish company pension schemes must overnight, if we leave the UK, fill a huge funding black hole.

“The implications for Scots who are members of these defined benefit pension schemes and for the companies themselves are huge.

“It’s now clear beyond doubt that independence puts the pensions of hard working Scots at risk.”

Source: BBC News