Professional COVID concerns plummet to all-time low
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Rates of professional and family concern continue to drop in our COVID indices. This is notable because family concerns have not been this low since last summer. There was a slight uptick in personal concerns, but they remain well below 50, keeping the panel closer to ‘not worried at all’ than ‘extremely’ worried over COVID-19.
The sharpest decline was in the professional concern index, which dipped below 45 for the first time since its inception. Interestingly, among the schemes expressing some professional concerns, the dominant themes are uncertainty over the future of work and worries over the pandemic’s effects on the covenant. Further to that, the proportion of schemes saying their sponsor covenant has weakened since the outbreak of COVID-19 is on the rise.
Panel members urge the public to manage expectations for a return to in-person activities
Members of our COVID research panel think that we should manage our expectations for the next phases of the re-opening. And though most still anticipate seeing more of their friends and loved ones by May, they also caution of the long way to go before things are stable and safe enough for other activities. For example, the panel is less bullish about the prospects for UK travel or even a trip to the pub, predicting that we will not be able to enjoy either of these activities until the latter half of July.
In addition to the timelines above, panel members contend that we should not expect to:
- Attend a family gathering until July
- See colleagues in person until August
- Hold in-person meetings until October
- Attend in-person events until November
- Travel abroad until January 2022
Learning to live with COVID in the long-term
UK pension professionals believe that the pandemic’s macro consequences will last until May 2023. This continues the trend of steadily decreasing expected durations which started in February. However, there is a lot of uncertainty about what the world could look like by that time. For example, some cite the scientific viewpoint that COVID will not be eradicated but rather something we live with as new variants continue to evolve. Other panellists believe that the economic recovery we are witnessing is not telling the whole story – warning that we can expect a fiscal reckoning because of high government spending during the pandemic.
Healthcare and IT – falling out of fashion?
Pension professionals are less confident about the sector winners than they were two weeks ago. Interestingly, communication services is now the only ‘winner’ to hold its position above 90 on the sector sentiment indices, while healthcare and IT both much lower this week. The decline is especially pronounced for healthcare, dropping below 70 for the first time.
Neutral sectors are also falling out of favour, with the financials, utilities and energy sentiment indices each dropping steadily. Finally, over two-thirds of schemes predict that real estate will lose out after the pandemic, making it the biggest ‘loser’ by a wide margin (see chart below).
Has the pandemic impacted your sponsor covenant, and what will its economic consequences be? Click here to tell us in our bi-weekly survey.
Previous articles in this series:
About the COVID Concern Index
This short survey helps gauge sentiment of our community on the pandemic. The results are distributed via the community newsletter. Until 31/08/2020, this was a weekly survey. From 01/09/2020, the survey shifted to a bi-weekly cadence.
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:
A methodology change took place on 06/10/2020, affecting data from 20/10/2020 onwards.
Prior to 06/10/2020:
- Lowest possible value = 1 month
- Highest possible value = 6 months
Following 20/10/2020:
- Lowest possible value = 1 month
- Highest possible value = 12 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
Following 15/04/2020:
- Lowest possible value = 3 months
- Highest possible value = 60 months
Macro rates index:
- -100 = all respondents think rates will fall
- 0 = all respondents think rates will stay the same
- +100 = all respondents think rates will rise
Sector sentiment index:
- -100 = all respondents think the sector will be a ‘loser’ in the pandemic
- 0 = all respondents see a neutral outlook for the sector
- +100 = all respondents think the sector will be a ‘winner’ in the pandemic
Concerned about the coronavirus outbreak and its macro implications? Click here to take part in the bi-weekly COVID-19 survey.
