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Pensions & Investments: Most plan sponsors see 50% chance of U.S. recession

March 24, 2020

NEPC's Pension Investor Flash Poll was mentioned in a recent Pensions & Investments article.

More than 3 in 4 pension plan sponsors (79%) say there's a 50% or more chance that the U.S. will slide into recession due to the COVID-19 pandemic, according to a survey by NEPC.

Larger plans were found to be even more pessimistic about the risk when compared with smaller plans. About one-third of sponsors with more than $1 billion in assets put the risk of recession at 75% or more compared with 24% of smaller sponsors — those with less than $1 billion in assets — who believe the same.

Regardless of plan size, all sponsors see some risk of recession, with all respondents gauging the risk at 25% or more, according to the survey findings.

"The rapid spread of the new coronavirus has rattled markets and shaken corporate pensions who are trying to determine the true economic and market impacts of this pandemic," said Bradley S. Smith, partner and member of NEPC's corporate practice group, in a news release.

Most respondents are also bearish on expected market returns this year, with 63% seeing negative returns from the S&P 500. Of those, 15% see losses greater than 10%.

Larger plans, however, are more optimistic than smaller plans about market returns. Almost half (47%) of larger plans expect positive returns as compared with only 28% of smaller plans.

Most respondents see negative interest rates as unlikely, with 67% giving it a 25% chance of occurring. Fourteen percent indicated they believe there is no chance.

As a result, 52% of respondents are staying the course, saying the market is too volatile for actions. Those that are making adjustments are rebalancing to targets (31%) and raising cash (7%).

The survey polled 70 corporate and not-for-profit health-care pension plan sponsors during the week of March 9.

Topics: Press, Press Coverage

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