Pensions

Our creditor specialists help companies and trustees to understand the current level of security offered to the pension scheme. In the Pension Regulators code of practice it states;

“It is essential for the trustees to form an objective assessment of the employer’s financial position and prospects as well as his willingness to continue to fund the scheme’s benefits (the employer’s covenant). This will inform decisions on both the technical provisions and any recovery plan needed.”

What is an employer covenant review?

An employer covenant review is an objective and independent assessment of the overall financial strength of participating employers of a pension scheme.

We adopt a holistic approach working with existing advisors to provide clear recommendations.

As well as helping the company and trustees to understand the current level of security offered to the pension scheme, having an understanding of the employer covenant also enables:

• The trustees, with the company, to set the technical provisions which drive the liability valuation
• The trustees and the company to agree on a recovery period
• The trustees, with the company to consider the appropriate equity strategy and pick appropriate equity classes so as to achieve a natural hedge to the risk associated with the employers industry
• The trustees and the company to understand if an event is a type A and the resulting impact on funding.

Taking control – do you know…..?

10 key questions

1. Who is really in control? The company? The bank? The trustees?
2. Do you understand how the Pensions Regulator works?
3. Who in the group is obligated to fund the pension deficit?
4. On insolvency would the buyout debt be paid off in full?
5. What is an appropriate recovery period?
6. Have you considered alternative forms of security to cash?
7. Funding outside the triggers set by the Pensions Regulator? Does it matter?
8. How does your covenant compare when benchmarked against the industry?
9. How are you managing conflicts?
10. Would your approach stand up to external scrutiny?

How we can support you

• We have developed a bespoke approach which will meet your needs within a framework tried and tested with trustees, companies and the Pensions Regulator
• We adopt a holistic approach, working with existing advisers, and providing clear recommendations
• Our team has unique Pension Regulator and Pension Protection Fund insight, with an excellent track record of providing commercially sustainable solutions.