Implications of Covid-19 Crisis on Public and Private Pension Sectors

Luković, Stevan and Marjanović, Darko and Pjanić, Miloš (2022) Implications of Covid-19 Crisis on Public and Private Pension Sectors. In: Economic and Financial Implications of Covid-19 Crises. Université Côte d'Azur, Nica, pp. 296-312. ISBN 978-2-493478-00-9

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Abstract

After almost two years of coping with the Covid-19 pandemic, the global economy is still unable to regain pre-Covid growth rates. Governments worldwide have implemented various policy measures to counter the Covid-19 economic crisis, which triggered the public finance deterioration. Since public pension systems of many countries are financed partially through tax revenues, the rise of public expenditures could pose a danger to the safety of old-age pensions in the future. As for private pension plans and funds, the prolonged period of low investment return rates prior to the Covid-19 outbreak followed by amplification in the Covid-19 era has affected their financial position. However, global investment returns are recovering from the Covid-19 adverse impact, which benefits the private pension sector in maintaining the pre-Covid funded status. Also, the economic growth rate prospects are promising, combined with the unemployment rate decrease. These trends should mitigate the negative effects of exemptions from contribution obligations, deferrals in the payment of contributions, and reduction of contributions. In this way, current and future retirees would not experience significant drops in retirement benefits.

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