In their respective presentations, the economists Pablo Antolin and Philippe Ithurbide analyzed the sudden changes posed by the Covid-19 pandemic worldwide and why it is necessary to reformulate pension systems due to this crisis.

The pandemic affected the economies of the entire planet and, particularly, employment. The value of pension funds decreased due to the decline in world markets, reduced capacity to contribute to pension systems due to job losses, and a reduction in pension funds explained by the possibility of making it withdrawals to address personal emergencies derived from the crisis.

The Head of the Private Pensions Unit and Deputy Director of Consumer Finance, Insurance, Pensions Division of the OECD, Pablo Antolin, mentioned these and other challenges.

Because of these issues, the OECD has provided guidelines to its member countries, such as following the course of the crisis (it is recommended to continue contributing by means of, for example, a contribution subsidy), avoiding fund switches to avoid losses, and protecting workers and fund managers from the growing number of scams on the internet.

The organization recommends avoiding general access to early withdrawals from pension funds and conditioning such withdrawals, through legislation, to exceptional cases in which people face emergencies. It shows that Peru and Chile unfortunately appear with the highest Pension Fund withdrawals.

The economist also clarified that the long-term impact of COVID-19 on life expectancy and mortality is not substantial and recommended not to change the mortality tables, since this is a momentary crisis.

Amundi’s Senior Economic Advisor, Philippe Ithurbide, on the other hand, said that the combination of growing technological innovation and the health crisis has generated the need for different industries to adapt to the “new world.”

While digitization has followed the course of globalization, the pandemic has advocated the opposite, urging governments to look inwards, both in investment and logistics. This tension has further alienated countries that have lagged behind in creating new technologies.

“One of the great certainties of the COVID-19 crisis is the return to the interventionist policies of the State. The damage caused by this crisis should last for years and it is essential to mitigate the current effects of increases in inequality, poverty and unemployment, to prepare for events of the same type. Countries must take charge of this,” he said.

Regarding the crisis and its consequences, Ithurbide mentioned problems similar to those pointed out by Antolin, including the impact the crisis has had on the ability of governments and companies to maintain the solvency of the pension systems.

The economist recommends looking for alternatives in the reindustrialization of countries (robotics and digitization being the main axes, something made evident during the pandemic); those countries should prioritize productive sectors and use them to advantage, and finally, focus on the efforts of each country in a long-term strategy for potential investors, something similar to what happens in the Netherlands and its pension system.

The presentation can be viewed on the seminar’s website (https://seminariofiap.strim.cl/).

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