Thread by @Frances_Coppola

Those saying Scottish state pensions after independence would be paid by DWP as UK overseas pensions are being extremely foolish. They should be holding out for Scottish state pensions to be treated as a special case. Let me explain why. 1/

The UK does not uprate overseas pensions in countries where there is no reciprocal agreement. The triple lock does not apply to them. Many have not been increased for years. These are known as "frozen pensions". 2/

A "reciprocal agreement" means that just as the UK pays the state pensions of British citizens living in another country, so that country pays the state pensions of its own citizens living in the UK. 3/

But because Scotland does not currently have a state pension, a reciprocal agreement of this kind would by definition be impossible. The state pensions of Scots living in the UK at the time of independence would continue to be paid by the DWP. 4/

While the UK was in the EU, the EU's social security co-ordination rules applied. These ensure that member states honour the terms of their state pensions wherever in the EU their citizens are living. 5/

As far as I know, the UK still has grandfathered co-ordination rules with EU member states. So British pensioners living in Spain, for example, have their pensions uprated annually just as if they were living in the UK. 6/

But as neither the UK nor Scotland is now a member of the EU, it can't be assumed that these co-ordination rules would apply to the case of Scottish independence. My guess is that Westminster would decide they didn't apply and ScotGov would have no power to enforce them. 7/

So Scottish pensioners would be in the same position as overseas pensioners in countries with which the UK has no reciprocal agreement - Canada, for example. Westminster could therefore reasonably refuse to uprate their pensions after independence. /8

Obviously this isn't going to be acceptable to the ScotGov. So what could it do? Well, there are several possibilities. /9

First option: take over payment of all state pensions in Scotland from Westminster, re-novating them as Scottish state pensions. /10

Second option: negotiate a financial settlement with Westminster equivalent to the missing "reciprocal agreement". This might mean agreeing to pay part or all of the UK state pensions for which Scots living in Scotland would be eligible. /11

Third option: include the present value of future UK pension payments to Scots living in Scotland at the time of independence, including the effect of the triple lock, in negotiations about division of public assets and liabilities. /12

This last would exclude pension payments to future Scottish "overseas pensioners" - those who move from Scotland to the UK after independence, and any who build up UK state pension rights due to working in the UK after independence. It would be a complex calculation. /13

I'm not sure how you would balance the present value of future pension payments against the present value of nuclear subs, but that's in effect what this approach would involve. I predict a riot, frankly. /14

Imho it would be simplest for the ScotGov to pay the UK government to make pension payments to Scottish pensioners, in return for a commitment from the UK govt to maintain the same terms and uprating as applied to English & Welsh pensions. /15

But if ScotGov wants Scots to have higher UK pensions, it must pay a top-up pension itself. There is no state of the world in which a UK govt that hoped to be re-elected would agree to pay higher state pensions to Scottish pensioners than English, however much ScotGov paid. /16