Hung parliament for Britain as future of pensions policy thrown into doubt
The UK is facing a prospect of re-running the General Election after the Conservatives failed to secure the majority needed to govern.
As at 6.50am, the Conservatives had won 313 seats, down 12, and Labour had 260, up 29.
Just seven seats were yet to be counted, but a hung parliament is now inevitable.
The news stunned the financial planning community.
AJ Bell investment director Russ Mould says: “A dreadfully poor campaign has caught up with Theresa May and the Conservative Party, leaving the UK facing the prospect of a coalition Government for the second time in three General Elections
“Going into the poll markets had rather lazily been relying upon the opinion polls which continued to point to a Conservative win, so this unexpected development is likely to create some short-term volatility in stock, bond and particularly currency markets.”
No government is better than a weak minority government. Right?
— Abraham Okusanya (@AbrahamOnMoney) June 9, 2017
Two recent Treasury ministers have lost their seats: former chief secretary to the Treasury Jane Ellison and former economic secretary Simon Kirby.
Ellison had been working to steer through the Finance Bill, which legislates for the proposed cut to the money purchase annual allowance, and had fronted Government responses to challenges from Labour to make advice of the Lifetime Isa compulsory.
It turns out good campaigns get rewarded, bad campaigns get punished; democracy eh?
— Tom McPhail (@PensionsMonkey) June 9, 2017
Pensions minister Richard Harrington held on to his Watford seat.
However, there is uncertainty as to the future of pensions policy, as Labour and the Conservatives differ on issues such as the triple lock. Labour would like to keep the measure, while the Conservatives would move to a less generous ‘double lock’ and the Liberal Democrats say they would conduct a review into the feasibility of flat rate pension tax relief.
Fidelity pensions policy head Richard Parkin says: “Like most others, the pensions industry needs certainty and today’s result gives us anything but that. Even if a government can be formed the prospects of a clear and considered approach to long term savings seems remote.
“Strategically it seems that any reform of pension tax relief will remain on the Conservative back burner though economic circumstances may force it on to the agenda. Following through on the Cridland recommendations on state pension age and the proposed abolition of the triple-lock now look difficult and given the severe reaction to the long term care funding proposals we can expect little here any time soon.”
President of the Society of Pension Professionals Hugh Nolan says is may be impossible for the Tories to cut a deal with Labour when balancing cutting the defifict with Labour’s promises of higher pensions.
He says: “It looks like the grey vote from pensioners has done it again. Theresa May dared to withdraw the Conservative commitment to the triple lock while Jeremy Corbyn’s manifesto promised to make pensioners even better off, in the same year that pensioner households income passed the level for working-age families for the first time ever. It might be impossible for a Tory Party committed to keeping down the deficit to reach a consensus with a Labour Party that pledged higher pensions for all irrespective of the spiralling costs.”