Swinney’s pension pledge shows lack of independence ambition

First Minister John Swinney has pledged that an independent Scotland under his Government would reverse Prime Minister Andy Burnham’s pension policies and would keep the “triple lock”.

This, however, betrays both a lack of ambition for the opportunities of independence and an evident lack of will to correct other problems within the pension sector.

As we wrote in an article in our Magazine recently, the “triple lock” (the promise that the state pension would rise by the highest of inflation, average wage increases or 2.5%) was probably a necessity when it was introduced in 2010 as the UK state pension had become so low that it was causing serious instances of pensioner poverty.

That it was also a political ploy to play to a favoured audience at a time when Austerity was just about to hammer down on everyone else suffering similar poverty was intentional but it does remain true that it was a solution to a particularly present problem.

But it also led to some strange impacts when the Covid pandemic broke the algorithm. The lockdown then reopening of the economy, then the surge in inflation afterwards, saw pension rates climb far faster than inflation (when wage increases spiked) and then faster than wages (when inflation spiked) and led to the perception that pensioners where benefiting when the cost-of-living crisis was hitting everyone else.

Burnham’s solution is to move to a “double lock” that would remove the mandatory link to wages (sort of, pensions might still increase with wages on an ad-hoc basis when Ministers feel like it).

Enter Swinney who first made a major gaff by claiming that Scottish pensioners would lose their pensions (rather than merely see them grow more slowly than otherwise) and appears to have avoided censure for doing so.

Likely looking to shift focus away from that, he has now claimed that he would bring back the triple lock in an independent Scotland.

But why should an independent Scotland limit its ambitions to merely not making changes that appear to be unpopular?

In our article we point out that the double lock is itself not the solution to the problems in pension policy. Neither that nor the triple lock are going to solve the problems that really should be tackled going forwards. Issues like the reliance on the “Old Age Dependency Ratio” (the ratio between workers and pensioners) ill serve debate on how we fund social security like pensions (there is absolutely no reason to fund state pension solely from revenue from income tax and national insurance and nor is this the case in practice – pension sustainability debates are more productive when we include other taxes such as on corporations or wealth as well).

The role of health and ageing should also be considered and a Universal Basic Income would break the arbitrary link of a certain age being reached before retirement but would instead allow people whose health begins to fail earlier to retire with dignity while those who are fit, able and willing to keep working when they want to can be enabled to make that choice too.

And even more importantly, there needs to be discussion about the role of the private pension sector too. This is an area where an independent Scotland could radically reform things by, for example, more heavily regulating the fees that drain far too much of our savings into the pockets of shareholders or by outright bringing in a publicly-owned alternative for workplace pensions that allow people to take a single pension from job to job rather than retiring with dozens of small pots of money that they might lose along the way. That that public pension could be actively investing in Scotland to provide better homes, public energy and boosting Scottish businesses would be a major bonus.

This is a much more nuanced discussion than “I promise to restore the triple lock”. But it’s also one that shows how an independent Scotland can do more than just copy the UK unless doing so generates an inconvenient newspaper headline on any given day.