COVID concern indices dip to all-time lows as most covenants are left unchanged by the pandemic 

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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: 
 

 

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: 
 
20/04: A silver lining – economy likely to hit pre-pandemic levels in 2022 
07/04: Professional COVID concerns plummet to all-time lows 
25/03: Covid concerns are down, but new risks emerge 
11/03: Concerns over the pandemic’s lasting impact on the world of work are growing 
24/02: Pension professionals urge caution as vaccination efforts continue 
12/02: High vaccinations rates bring down COVID-19 concerns 
27/01: COVID-19 concerns at an all-time high 
13/01: New COVID-19 strain makes pandemic spiral out of control 
15/12: Another COVID summer on the cards despite vaccine rollout 
02/12: Divergent COVID-19 concerns show different realities 
18/11: The risks and consequences of COVID-19 complacency 
04/11: Sharp rise in COVID-19 concerns before the second lockdown in England 
22/10: COVID-19 outbreak to last at least until June 2021 
07/10: Prolonged COVID-19 outbreak is putting pressure on covenants 
23/09: How will the second COVID-19 wave impact UK schemes? 
17/09: Trust in UK government dwindling due to COVID-19 
26/08: Another step in adjusting to COVID-19 uncertainty? 
19/08: COVID-19 outbreak to last at least until February 2021 
12/08: Trustee sentiment around COVID-19 pandemic deteriorates 
05/08: Relaxed attitudes towards COVID-19 threaten economic recovery 
29/07: Does COVID-19 mean the ‘end of the world as we know it’? 
22/07: COVID-19 could weaken covenants and raise taxes and inflation 
15/07: COVID expectations set, except for economic recovery 
08/07: COVID concerns rise as economic outlook improves - why? 
01/07: Lockdown easing raises COVID concerns 
24/06: The UK government’s COVID-19 guidance attracts criticism 
17/06: COVID concerns shift to life after lockdown 
10/06: Will lockdown easing cause COVID concerns to rise? 
03/06: COVID concerns at an all-time low – is the worst over? 
27/05: Personal COVID concern subsides – but this may be a problem 
20/05: UK pension trustees worry there may be no ‘going back’ after COVID 
13/05: 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: The magnitude of COVID’s economic impact remains unclear 
01/04: Have UK pensions schemes settled into the ‘new normal’ of COVID-19? 
25/03: Rising levels of concern about COVID and a changing economy 
23/03: What do pension funds think about the economic impact of COVID-19? 
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 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: 

 
 
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: 
 
 
Following 20/10/2020: 
 
 
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: 
 
 
Following 15/04/2020: 
 
 
Macro rates index: 
 
 
Sector sentiment index: 
 
 
Concerned about the coronavirus outbreak and its macro implications? Click here to take part in the bi-weekly COVID-19 survey. 

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