Will pension move pay off for SNP?

By Glenn Campbell
Political Correspondent, BBC Scotland

The Scottish government has decided to keep overpaying pensioners in the wake of a blunder which dates back 30 years.

It has cost at least £126m UK-wide and will end in April next year - except in Scotland.

The UK government has decided to stop overpaying affected pensioners.

That means someone with a £10,000 pension will receive about £250 less next year than they might otherwise have expected.

To be clear, this is money to which they are not entitled.

They'll be allowed to keep what's been paid to them in error in previous years but the overpayment will stop. Their annual pension may still increase because it will be uprated for inflation.

John Swinney will hope the negative publicity is outweighed by goodwill from those who'll benefit - but there are only 5,000 of them

But the Scottish government is taking a different approach.

Finance Secretary John Swinney has decided to "freeze" overpayments to protect the incomes of those affected.

He thinks it would be unfair to stop paying people money they've inadvertently come to expect, therefore, someone with a £10,000 pension will continue to receive that amount.

What will change is that the £250 overpayment will be excluded when pension increase calculations are being made. In that sense, it is "frozen".

Almost 5,000 local government, police and fire service pensioners in Scotland will benefit from this plan.

It will cost about £6m over the next 10 years, although pension funds will already have budgeted for this.

The Scottish government has complained that the UK Treasury refused to let it do the same for 6,000 retired teachers and NHS workers.

A Treasury source has hit back at the "complete inconsistency" in the Scottish approach.

"It is not fair on those whose pension is adjusted or on the taxpayer to fund higher payments than some people are entitled to," said the source.

John Swinney decided to freeze overpayments

Labour MP Eric Joyce said it was "utterly irresponsible" and "completely eccentric", while the Conservatives said it was "bizarre" to keep subsidising a mistake.

The trade union UNISON was more positive, describing the Scottish government's decision as "more helpful" than Westminster's.

It did not, however, demand the UK Government followed Holyrood's example.

That is what police unions did when SNP ministers gave Scottish officers a better pay deal than the Home Office.

That, in turn, seemed to stoke resentment in England over Scottish spending levels.

If the SNP administration hoped to advance the independence cause by provoking a similar row, it has not yet materialised.

The decision not to cut overpaid pensions has also received hostile coverage from many Scottish newspapers.

John Swinney will hope the negative publicity is outweighed by goodwill from those who'll benefit - but there are only 5,000 of them.