British companies employing hundreds of thousands of people could face a multi-billion pound pensions headache if Scotland votes to split from the U.K. in the referendum.
European Union rules forbid pension funds with members in two different EU countries from running a deficit. If Scotland splits from the U.K. and becomes an independent EU state, the pension schemes of many large companies with employees on both sides of the border would fall afoul of EU law, leaving companies needing to quickly plug substantial holes in their pension funds.
EU rules allow two years for pension funds to comply with its requirements. Most pension funds have much longer recovery plans at the moment. A spokeswoman for the European Commission wouldn’t comment specifically on Scotland but said: "Cross-border pension funds need to be fully funded at all times."
More than 20 British companies could be affected significantly, with the largest impact on BT Group PLC, G4S PLC, J Sainsbury PLC, Tesco PLC and TUI Travel, TT.LN +1.33% according to JP Morgan. They could be left either having to find billions of pounds quickly or embarking upon a costly split of their pension funds. BT’s pension scheme is the largest corporate pension scheme in the U.K. with 320,000 members, £47 billion (around $75 billion) in liabilities and a funding shortfall of £6 billion.
