Four in five defined benefit plan sponsors in a poll conducted March 9 said there was at least a 50% chance of a recession because of the COVID-19 pandemic, NEPC reported Tuesday.
Sixty-seven percent of respondents said negative interest rates in the U.S. were unlikely, giving such an occurrence only a 25% chance. Nineteen percent put the chance of negative rates at 50% or more, and 14% said there was no chance.
Sixty-three percent of plan sponsors said they expected negative returns from the S&P 500 in 2020, and 15% anticipated a loss of more than 10% for the year. Only 37% of respondents expected positive returns.
“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,” Brad Smith, a partner and member of NEPC’s corporate practice group, said in a statement.
“While this is a new landscape of uncertainty, NEPC is counseling corporate pensions and all investors to mitigate risk by staying diversified, rebalancing towards targets, and having a clear plan of action.”