COVID Concern Index subsides – have UK pensions schemes settled into the ‘new normal’?
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From March 24th to March 31st, the professional concern index has fallen most – by nearly 13%, to below even pre-lockdown levels. Both the personal and family concern indices have also fallen – so are UK pensions professionals and their providers settling into the ‘new normal’?
Pensions professionals are still adjusting their expectations
Considering the number of daily new coronavirus cases has not subsided in the UK, the US or the rest of the world, there is little reason to believe that lockdown restrictions can be lifted in the near future.
The mallowstreet weekly survey reveals that the minimum duration of the outbreak is expected to be at least four months from today, and the macroeconomic effects are expected to be felt for at least 10 months.
These readings are more optimistic than last week’s, but more pessimistic than before the lockdown measures were put in place: reflecting that people are still trying to make sense of the situation.
And it’s not just a personal matter: the comments provided in the survey continue to reflect a major concern about the vulnerable, the effects on markets and even more profound implications for the UK and global economy.
Relief in some areas gives way to new concerns
Pension professionals share confidence in the positive effects of the protective measures imposed in the UK and feel safer and more protected as a result.
However, a new concern has emerged about the safety of the UK’s health workers and the capacity of national health systems overall.
Additionally, the industry fears that weakened covenants and market dislocations may lead to pension cuts, while bankruptcies and growing unemployment would lead to an increase in public debt, which would take a long time to undo.
The pandemic will have both negative and positive long-term effects
There are no changes in what pension professionals think would be the effect of the outbreak on the economy – 95% still think that the economy would look at least somewhat different after the outbreak is over, with half expecting the economy to be ‘very different’.
The industry expects a number of negative effects from the COVID pandemic:
Unemployment will rise sharply and become permanent for some
Governments will be weighted down with debt
Austerity will return, and inequality will worsen
Some level of recession is inevitable
Disruption to global supply chains will lead to onshoring some manufacturing activity
However, the pandemic may also lead to the following positive effects:
A shift from efficiency to resilience
A more permanent shift to digital services and home deliveries
A new way of work emerging: more virtual meetings, fewer people, and automation as a priority
A ‘digital economy’ which will take a while to scale up enough to reduce unemployment
Pollution levels decreasing, and environmental concerns abating
The NHS becoming more appreciated, better funded and more resilient
Let us know how COVID-19 is affecting you today, personally and professionally – click here to take the weekly survey.
About the COVID Concern Index
This short weekly survey helps gauge sentiment of our community on the pandemic. The results are distributed each week via the community newsletter.
The COVID Concern Index values should be used as indication only and do not constitute advice. Their values are bound by the choices available in the survey on which they are based.
COVID Concern Index:
0 = respondents are not worried at all
100 = respondents are extremely worried
Expected minimum duration of outbreak:
Lowest possible value = 1 month
Highest possible value = 6 months
Expected minimum duration of macro effects:
Lowest possible value = 3 months
Highest possible value = 12 months
Affected by the coronavirus outbreak? Click here to take park in the weekly COVID-19 survey.