Pensions Employer Covenant and Restructuring

Multiple award-winning team known for our consensual approach and ability to create and deliver innovative solutions to protect members’ benefits

Who we are

Founded in 2005, the Pensions Employer Covenant and Restructuring team is PwC's award-winning covenant team. We are the largest specialised covenant team in the UK with 90 people across 8 offices, many with a background in restructuring and insolvency, enabling us to respond rapidly to our clients’ changing demands.

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

Wherever you’re based in the UK, whether you’re a global group, family business, not-for-profit, local government or an industry-wide scheme, we have a covenant expert in your region ready to support you with covenant, monitoring or any of the growing range of auxiliary pension services.

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 our service. With a base of objective analysis and sector insight, through strategic advice we look to achieve fair and equitable outcomes for our clients.

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.

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 covenant strength using a tried-and-tested methodology, so that you know what are the key drivers of covenant strength and what 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 and guidance.
  • 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 Integrated Risk Management: Our assessments and recommendations translate into clear advice to you, so you know what actions are needed.
  • Where we can help:
    • Triennial valuations - supporting both Schemes and Sponsors through their valuation cycle, working with their actuarial, investment and legal advisors to reach the optimum position for our clients.
    • Ongoing and exit covenant assessments - applying our methodology to assess the strength of the employer covenant and possible returns in a potential insolvency or stressed scenario.
    • Affordability - considering the ability of the Sponsor to meet its obligations to the Scheme, focusing on long term funding targets and identifying key risks in meeting the target, supporting clients in negotiations and being innovative in finding alternative funding options when affordability is limited.

Corporate activity and restructuring

M&A activity, raising finance or corporate restructurings all have potential to disrupt pension schemes. As a team we have worked on some of the biggest M&A deals in recent years, frequently alongside our colleagues in the wider restructuring practice and other areas of specialism to ensure that we bring the best of PwC to every client situation.

  • All angles covered: In addition to technical and financial due diligence 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 TPR’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.

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 Apportionment Arrangements (‘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.


ESG is now becoming a core focus for many of our clients, as well as an area of increasing regulatory scrutiny. At our 2021 Pensions & Restructuring Lawyers Event, more than 50% of attendees said that ESG should be a key risk to consider when assessing long-term covenant. Core ESG areas we are focusing on within our covenant assessments include:

  • Climate-related or Net Zero exposure (across sectors and geographies)
  • Scenario analysis (including TCFD requirements)
  • Longer-term covenant view and impact of global or national shifts and ‘megatrends’
  • Management perspectives and action plans
  • ESG-linked employer financing
  • Interplay with Integrated Risk Management and assessing how the ESG covenant exposure interplays with the investment ESG strategy.

Our covenant team work alongside our dedicated experts in the Sustainability and Climate Change team to draw on cross-industry expertise, data analytics tools and breadth of experience to provide our clients with leading insights and advice.


Tailored approach

We develop bespoke monitoring frameworks, tailored to the specific circumstances and covenant risk and value drivers of the client and the scheme, be it simple or complex depending on the scenario required. We have created monitoring frameworks for a wide range of clients, across many industries, and we would leverage our experience to develop an approach which monitors the key covenant and affordability metrics for your scheme(s).

Recommend flexible frameworks

Factors such as, the risks facing the scheme and regulation, change over time (e.g. in response to C-19) and it is also important to continually review and update a monitoring framework to ensure it remains valuable and relevant and continues to support our clients in their decision making. This ensures that trustees and sponsors alike can monitor the covenant regularly between formal reviews and have well developed contingency plans so they can take prompt and effective action when required, in line with the Pensions Regulator's guidance.

We apply a risk based approach

Within all monitoring, our aim is to support our clients in decision making and identify areas where further consultation with the sponsor or the trustee or an alternative action may be required. To assist our clients in their decision making, our frameworks include a flagging system that highlights key areas of risk based upon pre-determined ranges. We also seek to suggest appropriate mitigation measures.

Technology efficiencies

Our data analytics and automation tools will help deliver fast and reliable monitoring. We have invested in digital solutions that enable us to process data and solve problems at speed, as well as enabling us to present our findings clearly and interactively.

End-Game Planning

Given the new DB Funding Code, the increasing maturity of schemes, and TPR’s guidance for Trustees and employers seeking to reach certainty for members, there is an increasing focus on considering end-game options for schemes.

We, alongside our colleagues in the wider Pensions network, can help you to understand the right strategy for your scheme through:

  • Understanding relevant cash flows;
  • Stress testing to understand the factors that could prevent member benefits being paid out in full; and
  • Testing the options available to ensure that outcomes are improved.

Contingency Planning and long term journey planning

  • TPR’s guidance makes clear that it expects Trustees and sponsors of weaker schemes, perhaps with a distressed sponsor, to carry out contingency planning.
  • This focuses on considering how the covenant could change in future under various downside scenarios and develop plans to mitigate the risk - e.g. financial distress of an employer (considering insolvency protections), material deterioration in the scheme’s funding position, or one-off events (e.g. significant market disruption).
  • Agree the format of any contingency planning - we have received positive feedback from clients where we have run this as an interactive session with the company, trustee and other advisers.

PPF levy

In 2021, we helped 15+ trustee clients validate the value of their group guarantee/ ABC for PPF levy purposes, and supported a further 15+ other companies and trustees with the management of their 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.

Pension Consolidators

Transferring to a pensions consolidator is an emerging end game solution for Defined Benefit pension schemes. With untested guidance recently published by the Pension Regulator for sponsors and trustees, it requires careful planning and execution, supported by robust analysis and advice. We have significant experience of supporting clients in considering new solutions in the DB pensions market and navigating new regulations. We are here to support trustees and sponsors who are considering a transfer.

  • Feasibility assessment: Our proportionate initial assessment tailored to your scheme will help you decide if transferring to a consolidator is the right option for you.
  • Clearance application: We will support you in preparing the required Pension Regulator’s clearance application to demonstrate that the three gateway principles are met and other clearance criteria are duly assessed. Our extensive experience in delivering covenant advice in complex transactions best places us to provide the robust analysis you need.
  • Lead advisor: A consolidator transaction can be a lengthy and complex process involving multiple stakeholders and procedures, requiring a broad range of technical expertise. As a cross-disciplinary Pensions team at PwC, we collaborate internally and externally to consider the whole picture and to bring you appropriate advice, tailored for your needs.
  • Wider end game strategies: Consolidators may not be the appropriate solution for all and we are committed to helping you find and evaluate the right longer-term solution that best protects the benefits for members of your scheme.

Case studies

Leveraging the best of PwC globally

In 2018, 2 major players in the retail industry entered talks over a potential merger, but could not reach an agreement over one of the party’s pension scheme.

The PwC Pensions team helped to unlock the deal by advising on an innovative structure to carve out the pension scheme from the merger. This was a complex solution that required support from a range of PwC specialists across the UK and US, including - actuarial, tax, accounting and industry experts - against the backdrop of a high profile and fast-moving transaction.

The pensions solution provided the framework for the PwC team, working collaboratively with the trustees, to complete one of the largest ever full insurance buy-ins (£3.8bn), securing pension benefits for more than 12,000 members, in an accelerated time frame.

“The PwC team were able to draw on a unique depth and breadth of expertise to provide an excellent client experience”

Supporting trustees to achieve full benefits for members in a radical restructuring programme?

The trustees of a pension scheme appointed us to perform a triennial covenant review of the c.£50m pension scheme.

The PwC Pensions team conducted the initial review and assessed the covenant as weak, and identified that the employer was in financial distress following a challenging trading period over a couple of years and increasing debt levels.

During the covenant review process, the private equity owner announced a change of strategy, with the group being divested on a piecemeal basis. We helped to agree a deal between the trustee and the owner, advising on a flexible security package and the structure of mitigation payments into the scheme as each site was sold.

The solution required ongoing support from PwC, where we worked collaboratively with the trustees and the management team to ensure that upon the conclusion of the process, there were sufficient resources available to the scheme to conclude a full buyout of the scheme, ensuring that members received full pension benefits compared to the c.50-60% of benefit expected prior to the agreement.

Delivering great outcomes

More than 10 years ago and just before the organisation went insolvent, its pension scheme was 40% funded. After continuous support from our pensions team as lead financial advisor pensioners are now getting 80% of their benefits.

We used our industry knowledge, modelling, transfer pricing and tax experts as well as insolvency and restructuring experience to support the trustees in their strategic decisions. We quantified over $3bn of FSD claims, and formulated an innovative method of proposed asset allocation across the global Nortel estate.

This method was selected by North American Bankruptcy Court Judges, and ultimately enabled the pension scheme to get a much larger share of global asset recoveries than would otherwise have been the case, with additional asset recoveries of over £1.2bn.

About our award-winning team

Our team has been involved in the creation and shaping of TPR guidance and testing it on the most high profile situations. With a long-standing, rolling secondment programme to TPR, we are in tune with their latest thinking and have worked on numerous iconic pensions cases that have shaped regulation.

We are able to leverage our experience and insights from advising many of the largest UK pension schemes to support you. We also have direct access to PwC’s unrivalled network of technical and sector specialists whom we can draw upon to support you.

We have a track record of leading-edge innovation over the last 15 years, working with schemes and sponsors of all sizes to create innovative, market-leading solutions. We can deliver a solution to any problem to get you the best results.

We have a diverse team, with 38% female staff and 29% from BAME backgrounds. Industry-wide, we have sought to facilitate discussions around diversity with our clients and other industry professionals in recent events, including our 2021 Pensions Conference and our annual Women in Pensions event, which this year featured Sarah Smart, TPR’s new Non-Executive Chair.

Our team has an unmatched depth and breadth that can support you in person across the whole of the UK and move quickly to find the optimal solution for you. We are the largest specialised covenant team in the UK with 60+ people across 10 offices.

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Contact us

Victoria Tillbrook

Victoria Tillbrook

Liability Restructuring Leader, PwC United Kingdom

Tel: +44 (0)7812 063987

Jonathon Land

Jonathon Land

Deals Chief Operating Officer & Pensions Partner, PwC United Kingdom

Tel: +44 (0)7879 411796

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