Six months of market volatility and COVID-19: reflections from August 2020

August marked six months since many American states and companies responded to the pandemic with shutdown and work-from-home orders. That’s six months of economic and market uncertainty—so we thought we’d take a look at what retirement plan participants have experienced and what actions they’ve taken.

Six months of economic indicators in constant flux

On March 23, the Dow Jones Industrial Average (DJIA) fell to its lowest point in 2020, 33% below where it started the year.1 The stock market rebounded over the following six months, but not all areas kept pace, and volatility was high. We also went from historically low unemployment pre-pandemic to the highest seen since the Great Depression.2 Although the unemployment picture has improved slightly, there are still millions out of work and plenty of uncertainty in the job market, as the pandemic continues to slow down economic activity. 

Chart shows the DJIA fluctuating but going up over 6 months while the unemployment rate also goes up

As the economy began to rebound from its lows, there was a corresponding increase in inflation, which is commonly measured by the consumer price index (CPI).3 Consumer demand spikes and supply chain disruptions have brought us not only changing prices, but temporary (and, in some cases, still ongoing) shortages of consumer goods, from toilet paper and hand sanitizer to yeast and pepperoni. 

Shows the consumer price index going up and down, but generally staying higher than before the pandemic

Participants are learning to live with market volatility

After an initial reaction to the pandemic and market volatility in March, during which the percentage of participants lowering their contribution rate spiked to 3.4%, the number of participants in our plans changing their contribution rates has returned to more normal levels of 1% to 2% of a plan’s population, on average. At the same time, the percentage of participants increasing their contributions fell, but in June started returning to normal levels.

Charts shows that few have increased their contribution rate and a falling percentage are reducing their rate

Stock market fluctuation also resulted in a spike of participants changing their investments in March, but that activity has also slowed down considerably and is back to normal levels. We see reflections of the pandemic’s uncertainty, however, in what people are doing with their money. Among those who changed their investments, a larger percentage moved into stable value than in July 2020 or in August 2019—showing a desire for certainty. 

Chart shows more people moving into stable value in August 2020 versus July 2020 and August 2019

Looking for relief in the CARES Act and retirement plans

For participants who have suffered from COVID-19 or its economic impact, the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act has offered some relief. Although calls to our participant service center have come down from their highs earlier in the pandemic, CARES-Act-related calls continue to make up more than 10% of total call volume. 

CRDs—Less than 1% of our participants have taken a coronavirus-related distribution (CRD). The number of CRDs taken hit a peak in June and has come down a bit since then. The average amount taken has been between $18,983 and $20,399, other than the April high of $26,174.

Loans—The CARES Act also raised the amount participants could take as a 401(k) loan. Again, less than 1% of participants have done so, but that activity has increased gradually since April. The average amount taken spiked to almost $13,500 in May, and has since come down closer to pre-pandemic levels.

A focus on the financial basics can help people through the next six months

Although the summer didn’t bring the slowdown in the virus that people had hoped, it did mean that we could go to the beach, the mountains, or the park to de-stress and sit outside with friends at our favorite restaurant or our backyards. With fall comes back to school—whatever that means in each school district—and the return of cool weather for much of the U.S., which experts warn could mean a resurgence of the virus and the economic uncertainty that accompanies it. Retirement plan professionals, sponsors, and educators should stay in close touch with participants, with messages that reflect the current situation, but also reinforce the basics:

By helping people master the basics of personal financial management, we can help them not only manage their finances through the next six months of the pandemic, but also help develop good habits for the eventual return to normal.  


1 DJIA 2020 open ratesYahoo! Finance, August 2020. 2 "Civilian unemployment rate," U.S. Bureau of Labor Statistics, U.S. Department of Labor, September 2020. 3 Consumer price index—August 2020, U.S. Bureau of Labor Statistics, U.S. Department of Labor, August 2020.

All participant data mentioned above is John Hancock’s internal data as of August 31, 2020, for the open-architecture platform only. As of June 30, 2020, the open-architecture platform included approximately 1.3 million participants and 2,009 plans. 

Fund categories were defined as target-date fund, stable value/fixed income, growth and income, equity, asset allocation, and other. A participant in ≥2 fund categories was labeled as diversified. A participant who changed from ≥2 fund categories to ≥2 other categories—or asset allocation alone—was labeled as having rediversified.  

A widespread health crisis, such as a global pandemic, could cause substantial market volatility, exchange-trading suspensions and closures, affect the ability to complete redemptions, and affect fund performance; for example, the novel coronavirus disease (COVID-19) has resulted in significant disruptions to global business activity. The impact of a health crisis and other epidemics and pandemics that may arise in the future could affect the global economy in ways that cannot necessarily be foreseen at the present time. A health crisis may exacerbate other preexisting political, social, and economic risks. Any such impact could adversely affect the fund’s performance, resulting in losses to your investment. For complete information about a particular investment option, please read the fund prospectus. You should carefully consider the objectives, risks, charges, and expenses before investing. The prospectus contains this and other important information about the investment option and investment company. Please read the prospectus carefully before you invest or send money. Prospectus may only be available in English.

The content of this document is for general information only and is believed to be accurate and reliable as of the posting date but may be subject to change. It is not intended to provide investment, tax, plan design, or legal advice (unless otherwise indicated). Please consult your own independent advisor as to any investment, tax, or legal statements made herein.

MGTS-43382-GE  09/20 43382     MGR0925201338992

Lynda Abend

Lynda Abend, 

Head of Strategy and Transformation

John Hancock Retirement

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