How the Upcoming General Election Could Impact Your Pensions, Mortgages, and Investments

The general election could impact mortgage rates, pensions, and investments. 

On May 21, Prime Minister Rishi Sunak called for a general election on July 4. What does this mean for your finances? 

Pensions 

The next government will face big decisions about pensions. Both the Conservatives and Labour support the pensions triple lock. This means the state pension will rise by the highest of average earnings growth, inflation, or 2.5%. 

Tom Selby from AJ Bell says neither party is likely to discuss it openly, but they might consider raising the state pension age sooner to save money. The current age is 66, with plans to raise it to 67 by 2028 and 68 by 2046. 

Another important issue is the lifetime allowance. The Conservatives scrapped it this year, but Labour plans to bring it back. Selby warns this would complicate the system and discourage investment growth. 

Changes to auto-enrolment in pensions are also overdue. There have been suggestions to lower the minimum age from 22 to 18 and adjust qualifying earnings, but these changes have not been implemented yet. 

Tim Middleton from the Pensions Management Institute hopes the next government will prioritize reforms. He stresses the importance of helping people make better decisions when they start drawing their pensions. 

Mortgages 

General elections can affect mortgage rates indirectly. Nicholas Mendes from John Charcol explains that uncertainty during an election can cause financial market fluctuations. Lenders might become cautious and delay rate changes until the economic outlook is clearer. 

After the election, a decisive victory can boost economic confidence and stability. This, combined with falling inflation, can positively influence mortgage rates. 

However, an election might make a Bank of England rate cut less likely over the summer, as the Bank avoids politicizing its decisions. 

Simon Bridgland from Release Freedom says housing policy reform is crucial, regardless of the election outcome. He suggests protecting tenants, supporting landlords, and having a stable housing minister. 

Laura Suter from AJ Bell highlights that first-time buyers want support to enter the housing market, while existing homeowners hope for policies that control inflation and lead to interest rate cuts. 

Investments 

Labour has proposed simplifying the ISA landscape to make investing easier. Tom Selby from AJ Bell supports creating a single “One ISA” product that combines the best features of the current six ISAs. 

James Henderson from the Henderson Opportunities Trust believes an election could benefit the economy and shares. He sees little difference between the two parties on major policy issues, which should reassure the markets. 

Labour’s commitment to house building could benefit companies with large landbanks. Both parties need to invest in infrastructure, which could help contractors working on major projects. However, the US election poses more uncertainty for UK investors than the local election. 

In summary, the general election could bring changes to pensions, mortgages, and investments. It’s important to stay informed and consider how these potential changes might affect your financial planning. 

Founded in 2017, Fintuity has fast become one of the only digital Independent Financial Advisers (IFA) in the United Kingdom.  Fintuity offers a wide range of financial advisory services including pensions, protection, investments and mortgage advice. The key difference is that as an exclusively digital service, we can offer significant savings and a service that is direct to you and on demand.