COVID-19 changed our daily lives in every respect. People found themselves suddenly working remotely with their children home from school, and ordering groceries online. Jobs, family life, health care and even the way we shop and eat have been affected.
As we look back at pension plans for 2020, we can see the magnitude of the effects the pandemic has had on the pension industry. Several large-scale changes have been made since March:
- The Department of Finance announced they would allow plan sponsors to stop contributing to their programs; this was previously unprecedented and unfathomable
- Most provincial governments extended deadlines for pension filing—another surprising decision
- A market downturn was expected, but not the unprecedented recovery. Market reaction to the pandemic and the economic recovery has been generally positive and helped by global monetary and fiscal policy responses.
- Plan members experienced extreme investment volatility, and according to research, most “stayed the course”. They did not change their investment selections or change the amount of their contributions. Surprisingly, of the small percentage that did change the amount they were contributing, over 1/3 actually increased their contributions.
Prior to COVID-19, some insurance companies announced fee increases. These changes were deferred as the crisis unfolded to help ease any financial pressure that clients may have been facing. With many communities reopening their economies, however, clients are now being informed that the previously planned fee increases will be implemented shortly.
The Financial Services Regulatory Authority of Ontario (FSRA) annual assessment fee for pension plan sponsors, which had previously been deferred, is also now being applied to client accounts. The fees charged by some insurance companies for plan member credit counselling, which had been waived until the end of June, have now been waived to the end of August or September.
What the changes have proven is that regulatory bodies can act quickly and be flexible, which is a relief from the past and bodes well for future innovation and flexibility. Temporary changes are suitable and have been necessary to help pension plan sponsors navigate through this new economic territory. Plan sponsors should be able to revert to standard deadlines and contribution requirements once the outlook for business and employment becomes more stable.
The pension world has also not been left unaffected. Pension consultants have also faced change and found that not only had their work patterns changed drastically; their clients were also facing new day-to-day challenges.
In addition to market changes, individuals working in the pension industry have experienced a shift in how they perform their roles and responsibilities.
Although the vast majority are working remotely, no longer commuting to see clients face-to-face, and conducting meetings with plan sponsors and plans members in new and innovative ways, they are here and ready to help you navigate the pandemic. Reach out to your Cowan consultant today for any of your pension needs.