With the UK waking up to a hung parliament, industry experts are speculating on what this means for state pension and social care policies
At present the general public is have been left with uncertainty as to who will form the next government. But industry experts are already predicting what the outcomes could be for the pensions industry.
Theresa May seemed confident that pensioners would still vote for her party even though the Conservative manifesto held steep implications for them. Hugh Nolan, president of the Society of Pension Professionals, suggests this was her downfall, stating, “So 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.”
Going forward whoever forms the next government needs to take into account not only what pensioners need but also what is best for a young generation who have been influential in shifting the political landscape. John Wilson, head of technical, JLT Employee Benefits suggests: “The State pension needs to be meaningful but affordable – a foundation that people can build confidence on. Also, the extension of the Pension Regulator’s powers to stop some of the unsettling headlines is all well and good, but such preventative measures need to be part of a wider settlement to plug the pensions black hole in defined benefit schemes. And, although automatic enrolment has led to more people saving, the average contribution rates are woefully inadequate and we need to keep nudging people in the right direction.”
However, regardless of all the speculation and theories coming out today, with no party having the overall majority it is likely that other national issues would be addressed before the pensions and social care policy. With Brexit negotiations being imminent, Steven Cameron, Pensions Director at Aegon comments: “In the immediate aftermath of the hung Parliament, we can expect to see trade-offs as parties seek to command a workable majority. With Brexit negotiations due to commence in days, the emphasis has to be committing even greater time and resource to arrive at an effective negotiating stance.”
David Brooks, technical Director at Broadstone also adds: “Making predictions is a fools game but what will seem likely is a Conservative government bolstered by the DUP. We know from the DUP manifesto that they support the triple-lock and universal benefits. This will mean this form of coalition would preserve the triple-lock. If the other parties can come together to create a loose coalition we would have a chocolate box of pension policy ideas to choose from – the triple-lock would almost certainly survive again.”
So in this current time of uncertainty employers and trustees need to be cautious. Sankar Mahalingham, director, Xafinity Plc explains “The impact on investors and pension schemes is likely to be marginally negative, unless they are hedged. Depending on their investment and funding strategy, some pension schemes will have slipped on this geopolitical banana skin. We would not recommend any knee-jerk reaction. However, they must continue to ensure their investment and funding strategy remains appropriate and “all weather” as a priority. It’s likely there are many more banana skins out there.”