Business Secretary Vince Cable also lost his seat as did Shadow Chancellor Ed Balls.

Mr Webb has been pensions minister for 5 years and was widely credited with steering forward the new pension freedoms and other pension reforms.

With a small number of seats yet to declare it is certain that the Conservatives will be the largest party in the new Parliament and may have a small overall majority. If they choose to go it alone and avoid a coalition or pact with another party, as several experts predict, it seems likely the next Pensions Minister will be a Conservative. Reaction to Mr Webb's defeat has been mixed.

Malcolm McLean, senior consultant at pensions firm Barnett Waddingham, said there were no immediately obvious candidates' to fill the new Pensions Minister role.

He said: "It will no doubt be a great disappointment to many within the pensions industry to learn that Steve Webb has lost his seat in the election and will no longer be able to continue his work now as Pensions Minister.

"There will be now no doubt be much speculation as to who the new Pensions Minister might be. There are no immediately obvious candidates and it would be unfortunate given the many pension challenges that still exist, if the new Minister was someone with little or no experience of pensions, as was sadly evident prior to Steve Webb's tenure.

"One possible solution might be to expand the new role proposed for Ros Altman to operate as the next Pensions Minister from the House of Lords. I await with interest to see who the Prime Minister selects in the new Conservative Government and what changes if any to pensions policy may result going forward."

Financial advisers Portal Financial have warned that Mr Webb losing his seat creates uncertainty for pensions.

Jamie Smith-Thompson, managing director of Portal, said: "Steve Webb's famous quip about retirees being able to buy a Lamborghini with their pensions helped catapult him into the public eye, with the pension freedoms widely touted as making pensions interesting again. The question now is what the future holds."

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"There have been so many reforms recently that there needs to be time for the dust to settle and for people to get used to what has already changed. However, we may see further adjustments, especially if the new minister feels as though there are big shoes to fill, and this could lead to more confusion for consumers."

The election result surprised many pundits and pollsters with the Conservatives doing well in England and the SNP almost sweeping the board in Scotland. The LibDems suffered a disastrous night while UKIP failed to achieve a breakthrough in parliamentary seats despite receiving millions of votes across the UK.

Financial Planner Chris Williams, CEO, Wealth Horizon, said: "Today's surprise result has highlighted even further the importance of diversifying investment portfolios. Investors should not try to second guess what's happening, but instead should diversify their exposure.

"However, not everyone advised this, and indeed some investment firms openly tried to predict what was going to happen, going as far as suggesting clients short the FTSE. Anyone that took such action will today have missed out on some decent returns."

David Brooks, technical director at Broadstone, said: "The big question is which person will get the now vacant pensions minister brief. We've enjoyed a period of consistency with Steve Webb, the incumbent for the whole of the parliament. We may be set for a return to period of pensions musical chairs. Boris Johnson would certainly be an interesting choice."

Jon Gwinnett, pensions technical manager at Nucleus, said: "Steve Webb, while not without fault, has been the most successful pension minister for years. His loss will be keenly felt. So too will that of Gregg McClymont - together they had brought a degree of stability to pension policy outlook in the face of the Treasury's interventions.

"What will the future hold? Ros Altman has already been promised a place in Government – would it be too much of a leap to see her take a role formally in the pension ministry? Whoever is chosen, never has a steady hand on the tiller been more important, as we continue to navigate the early surge of the pension freedom sea."