COVID concern indices dip to all-time lows as most covenants are left unchanged by the pandemic
Pardon the Interruption
This article is just an example of the content available to mallowstreet members.
On average over 150 pieces of new content are published from across the industry per month on mallowstreet. Members get access to the latest developments, industry views and a range of in-depth research.
All the content on mallowstreet is accredited for CPD by the PMI and is available to trustees for free.
Rates of COVID concern continue to fall, most notably personal concerns, which we attribute to the panel’s high vaccination rates. Family concerns are lower as well, though some say they will only feel less anxious once their children and younger family members have received the jab. Finally, professional concerns are low, and the economy is starting to show some signs of recovery. Some warn however that we must remain cautious going forward because an overly optimistic reopening could lead to a new spike in infection rates.
Covenants are mostly unchanged since the beginning of the pandemic
The impact of COVID-19 is far-reaching and the economic damage from the pandemic has left sponsor covenants in a vulnerable position for many schemes. Indeed, throughout this series a large proportion of pension professionals said their employer covenant has become weaker since the start of the outbreak.
Yet things are taking a turn for the better. More than half of respondents to our bi-weekly survey report that their covenant is unchanged since the start of the outbreak. Further to that, only 24% of schemes describe their covenant as ‘weaker’, a notable change from last month. We will continue monitoring these data in the coming weeks to see if the economic rebound further strengthens sponsor covenants.
Westminster is slowly finding its stride
Governments around the world are struggling to come to grips with the pandemic, and at the start of the year, most in our panel were ‘very’ or ‘extremely’ worried about the government’s pandemic guidance. This month tells a different story altogether, and now most of the panel is only ‘somewhat worried’ or ‘not worried at all’ about Westminster’s handling of the outbreak.
Despite this more positive outlook, there are aspects of the government’s strategy that fail to hold up to scrutiny. For example, many are concerned that the government’s overly positive tone is misleading and could harm us in the long run by lulling people into a false sense of security. Another worry is that Westminster is failing to come up with a coherent strategy for handling cross-border travel. These considerations are especially important considering that by the end of the year, most expect that we will see the return of international travel.
Cautiously embracing a return to normal
The UK is back in business, and the country is using this month to celebrate the renewed freedoms by catching up with friends and loved ones in person. Many have already been to the pub as well, but the panel thinks it will be safer if we take our time before increasing the scope and scale of our social interactions. As a minimum, they recommend that we should not expect to engage in larger gatherings with our families or colleagues until next month.
In addition to the above timelines, our panel believe that we should not expect to:
- Hold in-person meetings until August
- Attend in-person events until September
- Work from the office until October
- Travel abroad until January 2022
In person events - how soon is too soon?
Pension professionals are warming up to the idea of attending in-person events in the near future. Close to half report feeling ‘somewhat’ or ‘very’ comfortable going to an event later this year, but importantly, they are only willing to do so if events strictly adhere to safety protocols and social distancing measures.
One idea that could make them feel safer is to ensure that attendees have received (at least) their first jab. Another proposal to lower risks is to host events away from densely populated city centres.
The other half of the panel are still uncomfortable with events, but very few are ‘very uncomfortable’ with the idea.
What is your take on the government’s approach to the pandemic, and what do you want to see happen before you would consider attending an in-person event this year? 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.