The COVID-19 pandemic is a humanitarian crisis of an unprecedented scale. In less than a month the UK, and the most of the rest of the world, has been transformed beyond recognition. Many will have lost loved ones, or be experiencing financial hardship as a result of the crisis. As things stand, there is little clarity on how long we expect this to last and the potential damage to life and economic activity.
Navigating the crisis
Millions of people are relying on their pension income, so it’s important that our clients have the best information about the knock-on implications for pension schemes and how best to get through the crisis.
The COVID-19 crisis is the biggest personal and economic shock that most have ever experienced. Each sponsor, pension scheme and member is affected differently. Many sponsors will be experiencing challenging trading conditions and some pension schemes will have seen funding levels fall significantly in response to the crisis.
The sheer volume of issues to think about may feel overwhelming. Pension schemes and sponsors must work together to navigate the challenges and to prioritise actions. While the immediate problems have to be addressed, we believe that getting the best outcome also requires thinking ahead.
To help our clients plan, we have developed a framework for anticipating the steps required as the crisis evolves and the road to recovery. Sponsors and schemes will recover at different speeds – and sadly some may never recover – but looking at the characteristics of each phase will focus your efforts on the right things at the right time. Our approach identifies what you should be concerned with at each stage, and just as importantly what you should defer.
Our framework takes you through five broad phases to ultimate recovery, although there is unlikely to be a smooth and clear transition from each phase to the next. We identify the priority actions for now, but also the priority actions that come later. Being prepared for what comes next enables schemes to act quickly and take opportunities to improve their position as they arise.
More detail, including the key priority actions in each phase, can be found in our article “Navigating the Crisis”.