How Does A Hung Parliament Impact Pensions?

By Financial News

As the fall-out of election 2017 settles and battle-weary Prime Minister Theresa May forges a deal with the Ulster Democrats to cling to power, the question for many is how does a hung parliament impact their pensions.

A hung parliament is when no party has an overall majority in the House of Commons.

The Tories have 319 seats to Labour’s 261, but if smaller parties voted with them, they could beat the Conservatives.

Adding the Democratic Unionist  Party sets to those of the Tories gives an unassailable majority.

The details of the deal between Westminster and Belfast are unknown at this time, but a draft of a similar plan in place in case Election 2015 shows that the Tories expect the 10 Ulster MPs to vote with them except when business involves North Ireland devolved matters and welfare reform.

Slender majority

The deal did also insist British armed forces were maintain at certain levels and defence spending was set at 2% of GDP.

The government also promised to look at tax incentives for businesses in Northern Ireland.

To shift Tory policy through Parliament, May is likely to have to trim her manifesto pledges.

The manifesto is considered a blue print for setting the Westminster agenda for the next five years after the vote.

But with such a slender majority, May cannot expect to navigate controversial policies like the dementia tax and funding for grammar schools through the Commons and Lords.

The DUP were also keen not to back her promise to cut the triple lock for state pensions, although the need for a 2.5% minimum rise looks unnecessary as inflation hits 3% and is rising.

Crystal ball

One certainty is the age for receiving the pension will keep on rising.

Investors have no crystal ball to predict the markets, but best advice would be not to overreact to  May’s dilemma.

Politicians may come and go, but the FTSE will outlast them all.

Change always leads to uncertainty in the markets, but investors should carry on sensibly staking money.

In the short term, share prices may be volatile, but in the long term, they should risen longer after May has left Downing Street.

Tagged under: