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More Public Plans Ramp Up Social Distancing Because of Coronavirus

Plans in Massachusetts, Mississippi, and other states assure retirees that benefits won’t be delayed, but suspend counseling appointments. 

By Sarah Min

More public pension plans in the US are ramping up social distancing measures this week in response to the COVID-19 pandemic. 

A number of retirement systems in states such as Massachusetts, Mississippi, Texas, and Washington are mandating employees to work from home, suspending guest visits, or conducting retirement counseling via telephone.  

In Washington, which has the highest number of fatalities to date from the coronavirus, the state Department of Retirement Systems said it closed in-person visits and services starting Tuesday.

At last count, the state had roughly 900 cases and about 50 deaths from the disease, which quickly spread in nursing homes. That’s followed by New York, which has 10 deaths, and California, which has eight. 

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Email and telephone services in the Washington pension plan will continue on a regular schedule, but the fund warned plan participants that it may have difficulty responding because of the high volume of phone calls. 

In Mississippi, the Public Employees’ Retirement System of Mississippi (PERS) on Monday suspended guest visits indefinitely to its building in Jackson. PERS will continue to pay benefits and process applications. But it encouraged its 335,000 members to hold off on calling unless they’re waiting on paperwork or are retiring before July 1.  

“We are conducting that work and handling operations while remembering that the health and well-being of our employees and members is of the utmost importance,” PERS Executive Director Ray Higgins said in a statement. 

In Massachusetts, employees in the Massachusetts Teachers’ Retirement System did not report to their workplace Monday or Tuesday, as part of an executive order from Gov. Charlie Baker that all non-emergency public employees work from home. The state pension system assured retirees there would be no delay in benefit payments. 

In Texas, which declared a state of emergency over the weekend, the state pension plan said Monday that most of its staff members will work from home. The Texas Retirement System will also increase space between workers who continue to come into the office. 

TRS will also increase efforts to disinfect the office and cancel all immediate air travel. The fund will close its door to in-person counseling appointments through the end of the month. But all annuity checks, benefits, and health care forms will be managed remotely.

The coronavirus impact on markets, along with dropping discount rates, erased $71 billion in funding from the 100 largest corporate pension plans in the US in February, according to actuarial firm Milliman. The funded ratio—which fell to 82.2% from 85.5%—tumbled to its lowest level in at least three years.

The stringent measures are in response to increasing calls from health care officials to flatten the curve, referring to the practice of social distancing to slow the spread of disease. Experts say the application will help hospitals not get overwhelmed with the rapidly growing number of cases. 

A number of businesses outside the pension world also temporarily closed storefronts in response to the pandemic. Apple, Everlane, Gap, Nike, Nordstrom, Sephora, and dozens of other retailers have shuttered their doors this week. 

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Home > News > Risk > Coronavirus - COVID-19 > And Now, the Case for a 2020 Recession
Coronavirus - COVID-19

And Now, the Case for a 2020 Recession

IHS Markit sees one hitting in the second quarter and lasting to year-end.

By Larry Light

Some seers are expecting a recession this year, the bitter offshoot of the coronavirus pandemic. But exactly how bad will it be? Try a peak-to-trough decline of 2.3% for the economy.

That’s the conclusion of IHS Markit, the London-based research firm, which just predicted that the downturn will begin in the second quarter and last through the end of the year, with recovery starting in early 2021.

In the year’s second period, the drop in gross domestic product (GDP) will total 5.4% annualized, the firm’s chief US economist, Joel Prakken, wrote in a report. Such a negative forecast “doesn’t feel like a stretch,” he argued. The catalyst, of course, is that “the spread of COVID-19 to the US is causing a sharp contraction in spending on activities that involve travel and congregating in public,” he noted.

Contributing factors, he maintained, also include “slowing global growth undercutting export demand, additional wealth effects from plunging equity prices, a drop in domestic production of crude oil and energy exploration.” 

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In all, this means a -0.2% showing for the nation’s GDP for all of 2020, he calculated. By mid-year, he foresees the unemployment rate rising to 6%, up from 3.5% in February. Personal consumer expenditures, or PCE, an inflation measure, will fall below 2%, he continued. The Federal Reserve wants it to remain above 2%.

It’s for those very reasons that President Donald Trump is pushing for a $1 trillion economic stimulus package, and the Fed has pushed short-term interest rates back to near-zero while also resuming its bond-buying program. The oncoming slump, the president said, could be “a bad one.”

“Even as consumer spending begins to recover during the summer,” Prakken wrote, “the legacy effects of the second-quarter contraction of PCE, continuing declines in energy exploration and production, and weak overseas growth will result in negative growth of US GDP averaging about -1.9% (annualized) over the second half of the year.” Add in the second quarter, and you get a best-to-worst slide of 2.3%.

Meanwhile forecasts of a global recession are flying. Morgan Stanley and Goldman Sachs have floated predictions that one already is underway. They pointed to the worldwide spread of the virus and indications that its economic effect on China, where it originated, were more severe than many projected.

But the two Wall Street titans didn’t go so far as to predict a US recession, opting instead for an economic slowdown.

Morgan foresaw the nation’s economy growing 1.8% in this year’s first quarter, 0.3% in the second, 0.2% in the third, and 0.2% in the final period. It contended that Washington was formulating a “strong monetary and fiscal policy response” that “will help revive global growth” in the third quarter.” Goldman said GDP growth in this country would slow to 1.25% from a previous estimate of 1.9%. 

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