Our response to June's General Election result
09 Jun 2017
Commenting on the election result and what it means for pension funds, John Walbaum, Head of Investment Consultancy at Hymans Robertson said:
“The only thing we can be certain of is more uncertainty. Uncertainty over Brexit and uncertainty over the future policies of the next UK Government.
“Equity markets are reacting fairly calmly. The main impact, as you would expect, is on the Pound, which is down around 2% against the Dollar and Euro. If that continues, while it will have a short term inflation impact on the UK, the underlying position won’t be affected that much. Real inflationary pressures remain low and will continue to stay low until we see meaningful increases to wages.
“The big question now is what will happen to Brexit and how Brexit negotiations will proceed. Arguably last night’s results have increased the chances of a softer Brexit and, depending on the make-up of the government that emerges, possibly even a second referendum on the issue. We hope for a sensible rather than hard Brexit.”
Discussing what it could mean for pension and social care policies, he added:
“Pensioners will no doubt be hoping that this could lessen the chances of the Triple Lock being removed. The Government’s own figures show that the State Pension changes introduced in April 2016 have reduced the long-term costs of the State Pension by £8bn a year including the cost of the Triple Lock. Moving to a “Double Lock” will be the equivalent of a £250 a year reduction in State Pension and will have the most significant impact on low and middle-earners who rely on it most.
“We hope the new Government takes a sensible approach to the regulation of Defined Benefit (DB) pensions. The aftershocks from BHS are still being felt across the DB universe. You cannot argue with the rhetoric of protecting pensions from unscrupulous bosses. However the reality is that this reckless behaviour is in the very small minority. Developing law to deliver the Conservative’s manifesto promise would have been fiendishly difficult.
“There is also an urgent need for the new Government to solve the current crisis in social care. Tackling the issue of ever-increasing costs from an ageing population can only be achieved through cohesive policy-making. The solution has to be integrated social, savings and healthcare policies that recognise the effects of demographic change. We’re sitting on a time bomb. To protect future generations, sorting this out is a must. The Conservative Party proposed a Green Paper on social care and we hope that any new Government will work towards achieving this.”