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Pensions Employer Covenant and Restructuring

Who we are

Founded in 2005, Pensions Employer Covenant and Restructuring is PwC's award-winning covenant team: the largest specialised covenant team in the UK.

We provide a full range of covenant and related services to sponsors and trustees of defined benefit pension schemes.

Wherever you’re based in the UK, whether you’re a global group, family business, not-for-profit, local government or industry-wide scheme, we have a covenant expert in your region ready to support you.

How we can help

As part of PwC, we can tap into deep experience of market sectors relevant to you, the economic outlook and actuarial & investment expertise. 

With a rolling secondment programme to the Pensions Regulator, we are always in tune with their latest thinking and have worked on the majority of iconic pensions cases that have shaped regulation.

We treat all our clients, no matter their size and complexity, as individuals. Understanding your situation and providing you with clear, practical and unambiguous advice is fundamental to the success of our business.

Pensions expert award 2020

Employer Covenant Assessment

  • What is covenant? The covenant – as defined by the Pensions Regulator – is the employer’s legal obligation and financial ability to support their defined benefit scheme now and in the future.
  • Easy to understand:  We assess the strength of covenant using a tried-and-tested methodology, so that you know what supports the strengths and presents risks to your covenant
  • Widely recognised:  The results of our assessment are easily interpreted by actuaries and fully aligned to the Pensions Regulator’s own approach
  • Clear results:  We focus on communicating the results at the right level for your needs, in a clear ‘traffic light’ system that is easy to understand
  • Linked to advice:  This concise assessment translates into clear advice to you, so you know what actions are needed

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Corporate activity

M&A, raising finance or corporate restructurings all have potential to disrupt pension schemes.

  • All angles covered: In addition to the technical/financial advice we provide to corporates and trustees, we believe understanding the regulatory or moral hazard implications of corporate activity on a scheme is fundamental for a successful outcome.
  • Unparalleled regulatory insight: Many of our people have seconded to the Pensions Regulator so we understand the Regulator's perspective and its key considerations.
  • Achieving consensus: Providing our clients with clear advice and committed support in negotiations where needed has proven to facilitate better corporate/trustee relationships and resulted in mutually beneficial outcomes.  

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Scheme Restructuring

Whether in distressed situations or for strategic reasons, proceeding with a scheme structuring can be challenging and complex for trustees and corporates, we’ll help navigate you to a successful outcome.

  • Proven track record: We have led more scheme compromises with the PPF via Regulated Apportionments (‘RAAs’) than anybody else. Our experience best places us to deliver the result you need.
  • Investment in stakeholder relationships: We believe early engagement with the regulator and collaboration with all stakeholders is key to reaching cost-effective and improved structuring outcomes.
  • Honest representation of facts and risks: Imposing solutions on stakeholders often leads to resistance. Success stems from clear transparent knowledge and this sits at the heart of our advice.

Other examples of services include guidance through flexible apportionment arrangements (“FAA”), the set up of escrows and trusts and considerations of the Pension Regulator’s moral hazard powers.

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PPF Levy

  • Close PPF relationship: Having supported the PPF in developing their latest levy methodology, and keeping abreast of developments means our team specialists are best placed to help corporates and trustees understand how the PPF levy rules apply to them.
  • Understanding your levy bill: PPF levy calculations can be difficult to understand but by simplifying the rules underlying them, we can help you identify the key drivers affecting your levy.
  • Minimising insolvency risk: Lower insolvency risk can drive a reduced levy on schemes. Among other things, we’ve successfully identified suitable PPF guarantees and contingent assets which have reduced our clients’ insolvency risk and therefore levy bill.

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Other services

  • Simplifying Integrated Risk Management (‘IRM’): Understanding how your covenant strength interrelates with the pension deficit and the investment strategy is an area we have refined so it is easier to implement. This allows you to easily monitor and flag key risks to covenant and scheme funding over time and determine how you’re doing compared with market norms.

We work closely with the rest of our Pensions colleagues within the actuarial, investment, regulatory and accounting space and would be happy to discuss how we could support you in these fields.

Find out more about these services

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Plant hire business - Corporate advice - £31m liabilities, £9.6m funding deficit

As part of a corporate refinancing we assessed the impacts on covenant of the proposed refinancing and set out the range of mitigation options available to our client. We then advised on the overall mitigation package and supported our client through the negotiations with the trustees. Mitigation was agreed in the form of cash and a second charge over the corporate’s properties which was a solution that worked for all parties.

Telecoms business - Trustee advice - £2bn deficit

The Plan was left with a > £2bn deficit following the insolvency of Nortel Networks in 2009, and since then, as lead financial adviser, we’ve supported the UK trustees, representing them in high-profile mediations and litigation. Using our expertise from across the firm, we were instrumental in developing a clear case to demonstrate that US$7bn of central assets should be shared on a pro rata basis (as decided in the May 2015 judgment). In doing so, we managed to help them agree a ground-breaking global deal which should help the scheme gain access to well over $1bn of additional assets and its fair share of the sale proceeds.

Automotive business - Corporate advice - £200m liabilities

Our client risked insolvency as half of its profits were directed towards pension contributions, preventing investment in the business. There was a real risk that the business could fail with a lack of investment which would have seen the schemes enter the PPF. We provided a solution which involved separating the pension liabilities from the business and sold the business to a trade buyer. We were therefore able to secure significant value from the sale, sufficient to settle the outstanding pension liabilities at a level above PPF benefits. Teams from all across PwC contributed to this complex solution which was considered to be a true one firm approach.

Contact us

Jonathon Land

Jonathon Land

Pensions Partner, Business Restructuring Services, PwC United Kingdom

Tel: +44 (0)7879 411796

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