UK pension trustees worry there may be no ‘going back’ after COVID
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Personal concern indices are tentatively stable – there is still no treatment for COVID-19, only containment strategies. The situation in care homes remains uncertain. The new way of working has come with positives and negatives. But with extended limitations, trustees and their providers are worried that nothing will be ‘as we are used to’.
Social distancing may not work
There is rising concern over social distancing – some respondents think common sense and risk aversion will prevail, but there are multiple reports of congregations in parks and outside food takeouts.
If social distancing guidelines prove too vague or difficult to observe, a second peak in COVID contagion may not only be possible but probable. With schools and shops expected to reopen in June, our respondents are facing difficult choices: keep their families safe or ensure income and productivity.
Extended limitations and unclear instructions are increasing uncertainty
The outbreak’s minimal expected duration continues to increase and now approaches five months from today. Our respondents think there are mixed messages about which businesses may reopen, as well as when and how.
Boris Johnson’s 10th May statement, as well as subsequent clarifications, have attracted significant criticism from our research panel. They describe government communications as unclear and inept. Opinions are divided – some want more prescriptive government intervention, while others think guidance and common sense should suffice.
‘Money doesn’t grow on trees’
With macro consequences of the pandemic and global lockdown expected to last for more than two years from today, we may not be back to previous economic activity levels until well into 2022. The cost of the government furlough scheme, growing public debt and deteriorating business cash positions remain a major concern. The UK, as with the rest of the world, cannot stay in lockdown forever – but what can be done if there is no cure or vaccine for COVID?
There is no ‘going back’ after COVID
Everyone in our research panel thinks the economy will look at least somewhat different after the global pandemic. Fewer people are saying it will be ‘very different’, perhaps reflecting a new habit of having to work from home and remain socially distant or isolated. But the mental toll of these measures is increasing.
The vision of future UK and global trends is becoming sharper with each new weekly survey:
- Deglobalisation – the UK is already fast-tracking the development of a COVID vaccine, and given supply issues more localised PPE production may be next
- Digitalisation and automation – more distance working and digital services means the high street may never recover, so businesses need to adapt and reorient themselves
- Resilience – the jury on the UK economy is still out and it is unclear if being service-based will prove resilient for the future
- Re-employment – those currently unemployed may find their jobs are gone after lockdown is lifted, so they need to acquire new skills in new sectors
- Less city living – cities have proven to be virus contagion hotspots, so they will be less sought-after, and the property market in cities is likely to experience a price crash
- Less travel – the hospitality and aerospace industries may not be the only ones affected, with doubts being cast over High Speed 2 and other similar infrastructure projects
What steps would you like to see government take in the current environment, and what are you most worried about for the future? Click here to take next week’s survey.
Previous articles in this series:
- 12/05: UK pension schemes don’t trust the lockdown exit strategy
- 06/05: Concerns over duration of COVID lockdown and macro effects intensify
- 29/04: Professional COVID concern spikes by 18% as trustees brace for a longer lockdown
- 22/04: Macro effects of COVID to last until 2022, with personal concerns up by 10%
- 15/04: COVID concerns fluctuate – there is no path to normalisation in sight
- 08/04: Although personal concerns subside, the magnitude of COVID’s economic impact remains unclear
- 01/04: COVID Concern Index subsides – have UK pensions schemes settled into the ‘new normal’?
- 25/03: mallowstreet Flash Insights: Rising levels of concern about COVID and a changing economy
- 23/03: mallowstreet Insights: Asset managers have shared their views on the economic impact of COVID-19, but what do pension funds think?
- 19/03: COVID-19: Government response divides pensions community
- 18/03: 96% of pension funds and trustees preparing for a long-term COVID-19 fallout
- 18/03: mallowstreet Flash Insights Report: COVID-19 – what’s on trustees’ minds
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:
A methodology change took place on 15/04/2020, affecting data from 21/04/2020 onwards.
Prior to 15/04/2020:
- Lowest possible value = 3 months
- Highest possible value = 12 months
- Lowest possible value = 3 months
- Highest possible value = 60 months
Concerned about the coronavirus outbreak and its macro implications? Click here to take part in the weekly COVID-19 survey.