Scotland's 'no' vote for independence does not mean 'no change' for pension schemes, industry experts have said.

Although employers need not worry about funding rules that can apply where a defined benefit (DB) scheme operates in more than one EU member state, stronger tax-varying powers for the Scottish Parliament could affect both tax relief on pension contributions and the tax due on pension payments.

Increased devolution will also mean changes that affect workplace pension schemes and their sponsoring businesses.

Kevin LeGrand, head of pensions policy, Buck Consultants at Xerox, said the future of pensions planning will be affected by the vote.

"Although the no vote means independence is off the agenda for Scotland, increased devolution will means changes," he said.

"The crucial changes will be in respect of the new powers over the setting of tax rates and possibly the devolution of greater spending control to Holyrood.

"Workplace pensions are closely tied to the tax system and any changes to that on both sides of the border will result in a growing divergence between the regimes on each side.

"This will become a consideration when planning the future shape of pension offerings and, as costs increase, it may in some cases lead to reduced quality of schemes for members," he said.

The Conservatives and Liberal Democrats have proposed giving the Scottish government complete freedom over tax rates and thresholds, Labour says it should be allowed to vary all rates by up to 15 per cent (up from ten pence).

The Scottish government is likely to publish its own proposals for devolution which could be more radical.

An Edinburgh-based senior consultant for Towers Watson, Arthur Zegleman, said: "Scottish Parliament has yet to use the limited tax-varying powers

First published 25.09.14

lindsay.sharman@wilmington.co.uk