• Report
  • Insurance
  • Pension Fund
  • European Union
  • Pensions
  • Global Research And Analytics
April 30, 2020


CRISIL’s insights and analyses of regulations, macroeconomic factors, guidance and trends affecting the insurance industry

Diminishing returns

The Covid-19 pandemic adds another painful twist. Pensioners may have to make do with less and less in future, even as workers are forced to contribute more and more


Pension funds, the refuge of millions in their sunset years, are staring at new risks, with the Novel Coronavirus (Covid-19) pandemic compounding the problem of dilution of robust pension systems by governments because of low interest rates and global slowdown – amid worker protests.


The risks will test the design and coverage of pension funds in terms of ability to continue providing diverse benefits. The large selloffs in markets will reduce investments and funding for pensions worldwide. That will also stoke the need for supplemental pension products.


Insurers are vulnerable, too. Not only because of an increase in claims due to deceased insureds or annuitants, but also inclement investment conditions toppling financial support for investment products.


Indeed, the painstakingly built drive towards demanding income security in old age, mounted by working classes across jurisdictions over the years, is also now in peril. In calendar 2019, the unionised Yellow Vests took to the streets of France to protest against changes in retirement age. The world beheld the young and elderly population protests in Chile transform their demands from train ticket price-hike complaints to constitutional demands in favour of reforms to the financial system, including pensions. 


Such efforts are increasingly at risk, and a secure retirement is turning a pipedream. Covid-19 has felled the economy, the health, and financial security of working-age groups – all at one stroke.