With 18 September approaching fast, a major consideration for those with investments in Scottish companies and savings in Scottish banks is how their assets would be affected by a “yes” vote.
Markets are volatile as the outcome of the referendum has become increasingly unclear, with the debate over continued use of the pound causing particular uncertainty.
So how would different types of savings be affected by independence? A report by Hargreaves Lansdown predicts that for savers and investors in the rest of the UK, there is little to worry about – some stock market and currency volatility might be experienced in the short term, but the UK stock market is well diversified and three quarters of earnings on the FTSE 100 comes from overseas, meaning there is a broad range of revenue sources.
For those with Scottish savings accounts, however, the long terms outlook depends on the type of saving.
In the short term, Scottish savers have no cause for concern about their cash, since the influencing factor is currency and this would unlikely to change for many months in the event of a yes vote. But if a new currency is introduced, an exchange may well be required, in which case savings will depend on the value of the new currency (if there is one).
No need for Scots to worry in the short term - the ISA savings held by 1.9m Scottish residents should be unaffected and the UK tax advantages of ISA will remain.
But eventually, Scottish tax rules may be different and Scottish residents would no longer have the option of saving into an UK ISA. At that point, Hargreaves Lansdown expects a Scottish version of the ISA would be launched and that there would be some form of grandfathering of UK ISA savings into any Scottish version.
In the meantime, it advises continuing to save into ISA to build up a tax advantaged pot. In fact, it estimates that the cost of taking money out of a Scottish ISA now would be £1,844 over a two year period, based on the average Scottish ISA value of £15,370 and an average market growth of 6 per cent..
“The best approach for long term investors is to ignore the 'noise' and stick with their plan. Invest with the right managers and they should deliver good returns for you regardless of the short term issues. It is more likely that you lose if you act in haste than you gain,” said Tom McPhail, head of pensions research at Hargreaves Lansdown.
It is unlikely that Scottish pensions would be affected in the short term – the same principles apply as for standard savings accounts.
Scottish residents should continue to save into pensions, particularly where their employer is also contributing, advises Hargreaves Lansdown. Scottish residents will, at some stage, have their own private pension system and at that point it is expected that savings in the UK pension system could be transferred to the Scottish system in a similar way to those emigrating today can transfer their pensions to overseas pension schemes.
Eventually, Scottish residents are expected to have their own tax and benefits system. At retirement, it is predicted that they will receive state pensions, part from the UK and part from Scottish systems according to the length of service in each.
Policies for life insurance should remain unaffected. If there is a change of currency this may present exchange rate complications with premium collection, but insurers would have the option of continuing to run these policies in sterling.