The UK's hung Parliament could lead to higher annuity rates, according to MGM Advantage.

Craig Fazzini Jones, director and head of designs for retirement, at the firm, has said that the stock market has viewed Westminster's current political stalemate as an indicator of increased indecision in Government.

"Gilt prices have fallen and yields risen which we expect will have a positive impact on annuity rates - especially when you combine this with the fact that the Bank of England is purchasing fewer gilts and there is a renewed focus on inflation risk," said Fazzini Jones.

Meanwhile, AXA Wealth has urged any new coalition administration to stop ignoring pensions and tackle the ticking baby boomer pension time bomb head on.

The wealth manager also called for a review of NEST and a move to remove disincentives to saving. It also said that the gap between the public sector and private provision must be addressed, and a coherent and cohesive strategy for providing pensions in the long-term needs to be formed.

"A big picture view of pensions was conspicuous by its absence in all of the main parties' manifestos," commented Mike Morrison, head of pensions development at AXA Wealth. "However, the parties now face the difficulty of shaping their policies with the additional challenge of no single party having an overall majority.

"With the predicted rise in the number of baby-boomer retirements it is vital that we have the right mix of incentives to save and flexible retirement options. AXA is committed to supporting a return to a savings culture which is an essential part of reforming attitudes towards long-term saving."

However, one blow was dealt to pensions last night with the loss of Nigel Waterson's Tory seat in Eastbourne to Liberal Democrat, Stephen Lloyd, who triumphed with 47.3 per cent of the vote.

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