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The impact of Scottish independence

UK´s universities could face £10bn pensions deficit if Scotland votes for independence


The UK´s universities could face an immediate pensions shortfall of nearly £10bn if Scotland votes for independence next year, leaving the pensions fund in crisis.

The Universities Superannuation Scheme (USS), which manages funds worth £34bn to pay pensions to hundreds of thousands of lecturers and staff, has warned that EU pensions laws have "considerable implications" for its viability.

Under EU rules on cross-border pensions, funds are not allowed to carry deficits and must be fully funded at all times, experts have warned. The rules are extremely strict for schemes that operate across international borders.

The USS, which is the UK´s second largest pension fund, manages funds for nearly 288,000 university staff across the UK and tens of thousands of existing pension recipients. Universities Scotland, the sector´s umbrella body, has identified a £9.8bn shortfall in USS´s total liabilities.

Among the pre-1992 universities on both sides of the Border that would have to help find the £9.8 billion are Oxford, Cambridge, Edinburgh, St Andrews, Glasgow and Aberdeen.

Although ICAS has suggested a few options for reducing the regulations’ impact, including asking the EU for a grace period, none are straightforward or guaranteed to happen.


The fund has a 10-year programme to address that deficit but it fears that a yes vote in next year´s Scottish independence referendum could force it to make good that shortfall immediately, putting the UK´s universities under intense pressure to bridge the gap from existing resources.

The Scottish government has resisted this argument, arguing that EU rules can allow cross-border schemes a period of grace to make good deficits. The UK and Ireland have special cross-border arrangements which gave affected companies three years to fill deficits, and the same could be used for Scotland.

Alex Salmond, the first minister, and other Scottish ministers insist that the EU would never allow an independence vote to damage the economy or harm big institutions and would search for as much flexibility as possible.

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