Scotland should avoid altering pensions tax relief if it becomes independent, the National Association of Pension Funds (NAPF)has said.
In a report published today, the pension industry lobby group set out a number of issues it believed needed clarifying to help ensure the smooth transition of the pensions landscape should Scotland break away.
It came in response to the Scottish government's Pensions in an Independent Scotland paper, which said the country would remain committed to auto-enrolment (AE) and an equivalent to the National Employment Savings Trust (NEST).
According to the NAPF, any changes to the pensions tax relief policy in Scotland would have cost consequences for schemes with employees across Scotland, England and Wales.
This is because they would be likely to manage separate pay-as-you-earn (PAYE) and corporate tax assessment and collection systems, the NAPF said.
The report said: "Any complexity in tax regimes is likely to add significant costs for employers and schemes, which in turn are likely to be passed onto pension scheme members."
It also warned that the "form fiscal and monetary policy takes in an independent Scotland" would be crucial to whether or not it would be attractive to investors.
"Clarity on these key planks of fiscal policy in an independent Scotland could help prevent mass disinvestment by strong long-term investors, such as pension funds, in the Scottish economy," the report said.
The NAPF said there would be increased closures of defined benefit (DB) schemes too as Scottish independence would enact cross-border EU law that requires schemes to be fully funded at all times.
The association, whose Scottish NAPF members have combined assets of more than £70bn, also called for greater clarity on how an independent Scotland would manage the abolition of contracting out.
The NAPF would like to know more about how the regulatory framework would operate in an independent Scotland, as well as who would police AE.
It concluded: "This paper has set out what we believe are the key areas that the Scottish and UK governments need to address so that pension funds and their members can make an informed decision prior to the referendum."
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