Are Covid infections creating staff shortages in the pensions industry?
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The current wave of Covid-19 is causing havoc in hospitals, pubs and other settings as many employees are having to self-isolate or are off sick. How is the pensions industry impacted by current high levels of infection?
At the beginning of 2020, when the first national lockdown was imposed, the pensions industry reacted by largely moving to home working, and the Pensions Regulator offered easements that allowed funds to focus administration on the core functions, postpone some reporting and give leeway to employers on contributions. Since then, these easements have largely ended, but Covid-19 has not. Although it is thought that the omicron variant is less severe than delta, employees may still feel poorly and have to self-isolate if they test positive.
Covid will expose those with key person risks
Although regulators and the Pensions and Lifetime Savings Association do not have data to confirm this, so far, there does not appear to have been a significant impact on the industry from the latest wave, despite the very high number of infections. Many pension funds, employers and consultants have had time to put in place appropriate plans to cover increased absences, said Ian McQuade, director at governance specialists Muse Advisory.
Organisations that have “strength in depth” will have alternates who can pick up any important actions that need to be addressed, while some lower priority work might need to be postponed, McQuade explained.
“We expect the challenge will come for those teams where there has not been sufficient focus on risk management, or where there may be existing key person or capacity issues. In these situations, we hear of people continuing to work from home, even whilst ill,” he said. While this has always been the case in some cases, with Covid, he said it appears to be increased.
He warned however that “just because someone can now work from home, even though they are ill, they probably shouldn’t as they might be more likely to make mistakes”, pointing out that some might have ‘brain fog’ - a side effect of a Covid infection.
“Putting these people in a position where they feel pressured to complete urgent and important tasks may not be a very sensible approach,” he said, recommending that employers should instead call on advisers and providers to help fill the gap.
Sickness absences reduced despite Covid
One administrator confirms that Covid-related absences have remained limited. Trafalgar House Pensions Administration experienced a 30% increase in Covid-related absences in the second half of 2021 but has not seen a spike in the most recent wave; Covid-related absences currently only account for around 10% of total sickness absence.
“We believe this is because of the move to facilitate home working, which means people can still be working whilst self-isolating,” said director Daniel Taylor.
Even with the impact of Covid, the firm has seen an overall reduction in sickness absence since the widespread introduction of home working. “We expect further long-term improvements as the negative impact of Covid continues to reduce and we can return to offering a mix of in-person and remote-working,” he said.
Home working and lockdowns have however brought some other health issues to the fore, as the administrator recorded a rise in occupational ill health driven by mental health and back problems. “The root causes of these issues now... a key focus of ours, as well as many other responsible employers who wish to continue to capitalise on the overall benefits being realised by remote working,” said Taylor.
How has the current wave of Covid-19 infections affected your fund or business?