Axis Pensions CEO on how COVID-19 is impacting the pensions industry

The COVID-19 pandemic has impacted various sectors of the economy, and the pensions industry has not been immune to its effects. Private pensions funds have faced challenges ranging from reduced contributions to members withdrawing their savings, leading to liquidity constraints and affecting projected returns. Eric Quartey, CEO of Axis Pensions, provided valuable insights into these challenges during an interview on CNBC Africa. Quartey highlighted the varying impacts of the pandemic on different industries within the private pensions sector. While industries like tourism have been severely affected, with reduced contributions due to the decline in tourism activities, the financial services sector has shown more resilience. He noted that banks have managed to retain their workforce, safeguarding private pensions funds heavily exposed to the financial services sector. One significant impact of the pandemic has been the withdrawal of savings by professionals facing economic hardships. Quartey explained that private pensions must pay out when individuals lose their jobs, leading to increased withdrawals. This has disrupted investment plans and budgets, creating liquidity constraints for pensions funds. In response to the challenges faced by the private pensions sector, Quartey emphasized the importance of embracing private pensions as a long-term resource mobilization vehicle for governments. He called for increased government and business support to encourage uptake of private pensions, suggesting measures like making private pensions compulsory in some jurisdictions and introducing incentives to attract more participants. Looking ahead, Quartey discussed the potential long-term impacts of the pandemic on the private pensions sector. He highlighted a silver lining in the form of increased awareness about the importance of backup savings, leading to a surge in private pensions uptake. Fund managers are expected to adjust their investment strategies, becoming more risk-averse and focusing on defensive assets like government securities. Quartey also predicted a shift towards alternative asset classes like commodities, citing the example of gold's impressive returns amid market volatility. Despite the uncertainties surrounding the pandemic, he expressed optimism about the resilience of private pensions and their ability to adapt to the evolving economic landscape. In conclusion, Quartey emphasized the need for a positive outlook and creative solutions in navigating the challenges posed by COVID-19 to the private pensions sector. While the full extent of the pandemic's impact is yet to be realized, he remains hopeful that private pensions will weather the storm and emerge stronger in the post-pandemic era.