Following first minister Nicola Sturgeon’s call for a second referendum over Scottish independence, Irwin Mitchell partner Penny Cogher has put forward a post Brexit scenario where there might be two different regulatory pension regimes.
One of these regimes would be EU-based for pension schemes based in Scotland, and one not.
“Pension schemes do not have their own legal entity – they are based where their trustees are. We may find schemes could arbitrage where they want to be based and so which systems of laws they must comply with.
“They may prefer to be in a non-EU regulation based environment. Or they might want to take advantage of Scotland’s more pragmatic laws for executing documents, making documents much less expensive than in the UK,” she said.
Cogher said this potential prospect could shake up the international pensions market at a time when there had already been an “onslaught on the industry”.
“One area of opportunity could be Qrops, the recognised overseas pension scheme whose tax advantages were curtailed for UK citizens in the recent Budget. Could Scotland become the new home of a new type of Qrops?”
She added that there were questions as to whether Scotland-based schemes would be able to afford their own pension protection fund, and whether Edinburgh as the heart of Scotland’s financial services industry could expect special terms from England on independence.
“We could also see greater divergence between Scots public sector pension schemes and the English based schemes, than we have already. And state pensions schemes could also diverge as the SNP has stated it wants to upgrade state pensions in Scotland if it can,” she said.
