COVID-19 concerns do not affect public trust in Dutch financial sector

Biggest concerns are about the economy

Households in the Netherlands are worried about the impact of the coronavirus outbreak on the economy, their own financial situation and that of financial institutions. Remarkably, on a 0-10 scale, they rate their concerns over the economy at 7.9, higher than those over their own finances, which they rate at 5.8. Low-income households evidently worry more about their own financial situation than those on higher incomes. Whereas persons working in public administration and healthcare report the fewest concerns, those working in sectors impacted by lockdown restrictions, such as in hospitality, and in culture, sports and recreation, express the largest concerns. Dutch households also expect the coronavirus outbreak to have repercussions on the financial position of banks, insurance firms and pension funds, but this worries them less than the impact of the virus on the Dutch economy overall. 

Trust in financial institutions remains high

Trust in financial institutions remains high among Dutch households, compared to previous years (see Figure 1). Three-quarters of the respondents say they mostly or fully trust their own banks, a figure that shows no sign of waning compared with a year earlier. Trust was measured on the basis of the survey question “Are you currently confident that the bank or banks to which you have entrusted your money will at all times be able to repay that money in full?” The measures which banks have taken to confront the coronavirus crisis, such as deferring dividend distributions to shareholders and creating additional room for lending, have made positive contributions to trust. Trust in insurance firms and pension funds also remained at the level seen in 2019. Roughly two-thirds of the respondents say they are confident that insurance firms are able to meet their contractual commitments. Also, around two-thirds say they are confident their pension funds will be able to pay out their pension benefits.

Figure 1 - Trust in own financial institutions holds up well

Percentage of respondents saying they mostly or fully trust their financial institutions

Note: Before 2018, only respondents holding a life insurance policy were asked about trust in their own insurance firm. The different survey samples might explain the trend break.    

Lower pension benefits expected 

The stable confidence ratings are clouded by dismal expectations about pension benefits. Two-thirds expect their pension benefits to be either somewhat lower (51%) or substantially lower (14%) than current commitments. Only one in five expects pension benefits to be in line with current commitments. A previous survey among the same target group showed that people respond differently to cuts in pension benefits. The largest group (29%) said they would wait and see if their pension benefits should be reduced. Just over a quarter (27%) said they would save up more, whereas just under a quarter (23%) believed they had enough financial leeway to absorb a reduction. The remaining respondents said they would respond differently or did not know how they would respond. 

Trust in politicians is sharply up 

In a remarkable development, public trust in the Netherlands increased in almost all other respects. Trust in tech companies such as Google, Apple and Facebook is the only exception. This is still below trust in the business sector overall, and virtually unchanged from a year earlier. The biggest increase is seen in public trust in politicians: up to 52% from 24% a year earlier. Trust in the business and public sectors is also up from the preceding year. In the wake of the global financial crisis triggered by the downfall of US merchant bank Lehman Brothers in September 2008, public trust declined almost across the board in response to the crisis.