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Scottish independence could spark mass pension crisis

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Scottish independence could spark mass pension crisis

A Scottish 'yes' vote in next month's independence referendum could spark a massive pension crisis at some of the UK's largest companies, rendering retirement schemes 'unaffordable', warns JP Morgan.

Companies that operate both north and south of the border could see their pension schemes deemed 'cross-border' if an independent Scotland is not recognised as an EU state. This would force employers to fully fund their liabilities, which the investment bank said would be 'unaffordable' for many large employers.

JP Morgan highlighted 22 companies that would face a 'material cash flow risk' due to the costs involved, according to a report in the Telegraph.

BAE Systems, BT, G4S, Sainsbury's, Tesco and TUI Travel were the six largest firms most under cost threat from Scottish independence, with Balfour Beatty, Trinity Mirror and Thomas Cook also set to come under balance sheet pressure.

These companies could try to offset the costs by splitting their pension schemes into separate entities or by purely by funding the liabilities in the Scottish scheme, but JP Morgan said that this would be at best complex and at worst 'unaffordable'.

The resident Scottish public will vote whether or not they want independence on 18 September.

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