The 'stability' of the new the Conservative-Liberal Democrats coalition government has resulted in a less choppy market landscape, with Schroders reporting that on Wednesday 12 May 2010, Sterling is trading higher against the US Dollar, reaching an 11-month high against the Euro.

However, the asset manager has said that it is too early to conclude whether this new coalition has calmed market fears over the UK's public finances.

Schroders says that it is doubtful over the longevity of the coalition. "We liken the new Cameron-Clegg partnership to a journey through a 'tunnel of love' amusement park ride," said European economist at Schroders, Asad Zangana. "The pair has been put in a small boat which will be floating through a long dark tunnel. If all goes well, the pair will make a nice couple by the time they come out at the other end, hopefully with public finances being returned to a sound footing. If not and if either party rocks the boat, this coalition could find itself very wet, and the country being asked to vote again before we know it."

One concern for the pensions industry must be that the two parties' 2010 manifestos do not always match up on savings. The Liberal Democrats pledged to fund around a third of their promise to raise the income tax threshold to £10,000 by giving tax relief on pensions only at the basic rate, contributing around £5.46bn a year on 2011/12 calculations. The Tories, meanwhile, made no mention of pensions tax relief in their promises.

However, both parties agreed that compensation would be paid out to those caught up in the Equitable Life debacle, and both would scrap the compulsory annuity rules.

The need for public sector pensions reform is also recognised by both parties, with the Tories pledging to cap them above £50,000 and consult with the Independent Parliamentary Standards Authority on moving away from the generous final salary system for MPs. The Lib Dems promised to reform public sector pensions and ensure they were sustainable and affordable for the long-term.

The restoration of the earnings link for the state pensions has been promised, with the Lib Dems making this effective immediately, and the Tories promising before the election that they would pay for this by increasing the state pension age to 66 for men and women by 2016 and 2020 respectively.

Early access to pension savings is another possibility bandied around by both parties.

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