The Pension Schemes Act 2021
New legislation is here which will be of keen interest and importance to all trustees of UK Defined Benefit (DB) schemes as well as management boards, shareholders and bank funders associated with a DB scheme.
Employer Covenant Advisory Services
COVID-19 and Brexit has had a profound impact on the financial position and outlook for many Sponsoring Employers of defined benefit pension schemes. Despite the uncertain economic and social landscape, the Pensions Regulator continues to expect Trustees to seek independent advice on the strength of the Employer Covenant.
Our dedicated Employer Covenant Advisory team, comprising Restructuring Services professionals and supported by sector and technical specialists, has extensive experience of undertaking complex covenant advisory assignments for schemes with deficits ranging from c. £5m to over £70m, across a variety of different sectors.
Our reviews are not just about the numbers – we help Trustees evaluate the performance of the Employer’s business, its management team and core challenges. Our effective reviews underpin negotiating options and strategies with the Employer to protect or enhance the underlying strength to the pension scheme.
We actively engage with the Employer during the review process and challenge the underlying financial projections and future affordability of the Employer in fulfilling its obligations, as well as evaluating options to reduce the risks to the scheme.
The scope of an Employer Covenant assessment can vary significantly, depending on the nature of the Employer (including Participating and Sponsoring employer relationships), its indicative financial position and the nature of the industry in which it operates. In addition, there can also be complexities surrounding the level of the pension scheme deficit and the strategy adopted by the Trustees with respect to the proposed recovery plan and access to security. We have acted in a variety of different circumstances including, inter alia:
We also advise Employers when considering and evaluating deficit repayment proposals or offering mitigation packages to Trustees of Schemes. We have previously acted as an expert witness in proceedings brought before the Determinations Panel of the Pensions Regulator.
Although each Employer Covenant assessment is unique to each individual Employer, our deliverables and advice are tailored to the specific needs of the Trustees. We often undertake work covering a variety of scopes, ranging from a desk-top review to a full in-depth financial analysis of the Employer either periodically, as part of a wider monitoring role or on an ad hoc / transaction-specific basis.
If you would like to speak with a member of our Employer Covenant Advisory Team, please complete the contact form below.
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