Covid-19 has affected every area of the economy, every business and every household. More specifically, the pandemic has led to unprecedented disruption and uncertainty for companies, schemes and service providers in the pensions industry. The speed that events have evolved left most in a state of crisis management, with traditional contingency plans ill-prepared to deal with the consequences of an extended period in lockdown. In response, workarounds have been introduced to address immediate needs, resulting in more agile working practices. Many of these practices have no doubt cut waste and layers of bureaucracy but may also have introduced additional risk. When the crisis subsides, companies will have an opportunity to assess lessons learned and identify those practices that should be incorporated into any future business models and operating plans. The collecting of data is critical throughout this period to gain key insights for assessing the impact these flexible work arrangements have had on performance, risk etc... For instance, during this period what has been the impact on performance and productivity, have absences lowered and has employee satisfaction improved?

There has been some discussion concerning the demise of the office working environment. Technological advancements in recent years, including the wider availability of high-speed internet and more powerful laptops, have allowed office-based businesses to enable staff to work from home and continue operating at close to normal levels. The sudden shift in working practice has been portrayed by some as a game-changer, however, the reality may prove otherwise. There is a difficulty in fully replicating the many benefits working in an office provides. These benefits can be observed in many areas that include the ability to (most) effectively build relationships and trust, feed-off each other to problem solve and innovate, and be supported with integrated IT infrastructure. That said, the more flexible and agile working practices that have emerged do suggest an opportunity to review how businesses could operate in the future. These could see a broader scope in how businesses communicate and share data. It could also provide previously unconsidered options to raise employee satisfaction and sense of well-being, and facilitate greater inclusion within the workforce.

One of the major challenges of the Covid-19 pandemic for businesses has been around communication at both a work and personal level, following the overnight introduction of working from home. This includes the exchange of large volumes of physical data between parties and the general transmission of information. A number of different elements require approaches that differ from the traditional office-based work environment/style such as:

• The equipment being used: the switch to laptops rather than desktops in some companies, with laptops being traditionally less powerful. An example of a workaround for this has been the introduction of ‘remote desktops’, which can be accessed remotely to analyse and work on large data sets.
• Methods of collaboration: for example, in an office-based environment, face to face working around a collective screen was a common and sometimes key component to collaborative problem solving. This can no longer happen, so teams have had to adapt to using video conferencing software and screen sharing.
• Virtual meetings: A commonly held belief is that face-to-face meetings provide for better discussion and collaboration. Covid-19 has challenged this norm. Therefore, the meetings that were, and still are essential to the functioning and maintenance of pension schemes have continued, albeit virtually. This has been achieved by alternative methods such as video conferencing, including the novelty for many of showing work/files via screen-sharing.

Another interesting element of this crisis has been the increased importance of issues at an employee level, as opposed to the wider business. In recent years, boardrooms and investors have seen a rise in prominence of Environmental, Social and Governance (ESG) factors. The Covid-19 pandemic has thrown the spotlight onto the least discussed area of ESG, namely ‘Social’, and provided an opportunity to begin to address problematic issues concerning areas such as employee satisfaction and inclusion/diversity policies.

• Employee satisfaction: During the crisis, parents have been able to spend more time with their children — due to no longer commuting and also the inevitable interactions that come from working from home. An added bonus may be the benefit of no longer paying for childcare. This has been facilitated further by companies allowing and even encouraging in some cases more flexible working hours, to ease challenges surrounding childcare.
• Focus on Social engagement: to compensate for the lack of social interaction that working in an office provides. Companies/managers have been keen to encourage, through the use of video-conferencing software, calls for social activities in order to engage with and support others. This includes virtual social gatherings and fundraising events for charity.
• Focus on Wellbeing and Mental Health: Early experience suggests people managers have also been more proactive in communicating with their staff, showing a genuine interest in the wellbeing and mental health of their staff during this difficult period of time.

Given the apparent success of these actions, the principles behind these have the potential to become permanent changes in working practice.

Inclusion and Diversity Policy (I&D) - ‘Inclusion’ within companies I&D policies is perhaps more challenging to address in a traditional office environment. By nature, office environments will not be the most inclusive for some disabilities and conditions, hence the crisis has opened up opportunities to rethink how businesses may operate in the future to better accommodate a wider range of individuals. For example:

• Some people who have conditions such as autism, ADHD etc.: these individuals can experience challenges with commuting to and working in an office environment, one example being those that experience sensory overload. These challenges can be difficult to overcome as offices and transport have limited capacity to cater to an individual’s needs. Working from home alleviates this as the home environment is one that is familiar and can be adapted more easily
• Disabilities that can induce fatigue: Working from home can also have a positive impact on those who work with fatigue inducing/centred disabilities, such as chronic fatigue syndrome (also known as ME). Neutralising the challenge of commuting and the rigidity of office working (e.g. working hours and office dynamics) means these individuals have greater energy levels, with the potential to work longer and also more effectively.

When the crisis recedes there is a risk that businesses will drift back to their old ways and miss a unique event-driven opportunity to transform their working practices. Following several months in lockdown a degree of operational stability has arguably emerged around staff working remotely. Team collaboration is stronger than ever, when we have never been further apart. Communication lines have been constantly open and video conferencing has never had a greater role to play. However, businesses now face new challenges as they shift focus on how to bring staff back to the office, whilst maintaining safety and flexibility. During this period however, the need to review and adapt traditional work practices will be critical, as will the ability to demonstrate agility in what will remain a fluid situation. A well planned return to the office will do much to consolidate any social gains derived since lockdown.

Covid-19 has placed the pensions industry’s capability to run operations remotely into an unprecedented stress test. The continued impact of the pandemic elevates the importance of having robust processes, systems and controls to maintain service quality and productivity whilst mitigating the potential for operational losses. During this period, operational processes may have been simplified to enable working from home.

In addition, industry participants have been known to make use of the outsourcing opportunities for administration services in countries like India. This has exposed some challenges in operational delivery. For example, some offshore employees and offices/companies:

• were subject to curfews at the outset of the pandemic,
• were not fully set-up for remote working due to reasons such as poor internet connectivity
• had unsuitable accommodation or work space
• experienced a shortage in the availability of laptops and
• may also be subject to a greater level of security concerns relating to working remotely.

This has led industry participants to incur unplanned expenses, with the task of having to equip employees homes with high speed broadband in order to support operational delivery, protect revenue and maintain client relationships.

Given the extreme event, contingency plans arguably fell short. However, despite all the challenges, the pensions industry has proven to be adaptable both at a company and individual level. Albeit this may have come at a great expenditure for some companies, such as requiring the purchase of equipment to enable remote working e.g. laptops replacing desktops, or with the time spent dealing with this crisis. People have had to become dedicated to the implementation and enablement of home working. There has been an opportunity cost to this activity, with valuable time taken away from other projects these people and whole teams may have otherwise been working on. As a result, in future there will need to be more evolved contingency plans with dedicated disaster response and planning teams, both in an operational sense and in a financial sense to research and formulate hedging strategies against such events.

Pension schemes will also need to re-evaluate their preparedness for such events. Covid-19 catapulted the country into lockdown, overnight. This was disastrous for whole industries such as hospitality and aviation. Sponsoring employers who fall into these industries have therefore been negatively affected, with mass redundancies and a catastrophic fall in profits, the likes of which even the most prudent of forecasts in the “Pre-Covid” times couldn’t have predicted. To support affected companies The Pensions Regulator has published guidance relating to the deferral of Deficit Reduction Contributions (DRC’s). Many companies are now considering, or have even deferred their DRC’s. The speed of this change tells us that trustees and their corresponding actuarial advisors need to be better prepared for this in the future. This means extra forecasting or planning ahead for more such extreme events.

In conclusion the opportunities that emerge from the crisis are perhaps more evolution than revolution. Whilst working from home has proven a viable option for many it is questionable whether it can truly be a replacement for the office environment. Working in close proximity to others is generally viewed as optimal for stimulating ideas and innovation. The pensions industry in particular has evolved and blossomed on this basis by bringing together highly skilled and educated people in one place. Without compromising these benefits, if changes adopted by industry to address the recent challenges are largely retained and integrated with traditional office-based working it could lead to a subtle shift in company culture. It would elevate “social” factors such as employee satisfaction and well-being, provide for greater inclusion in the workforce and recognise flexibility to working made possible by technology. Ultimately this crisis may have been a catalyst for companies to place a greater emphasis on the employee, rather than the stakeholder.