Covenant assessments
Trustees are required to assess the strength of the ability of an employer to support its pension scheme as this is a central component of trustees’ risk management and has been a core theme of funding guidance published by the Pensions Regulator.
From an employer perspective the assessment of the covenant can have a bearing on funding assumptions used for actuarial valuations and investment strategy, and therefore the cost of supporting the scheme.
Employers therefore have a material interest in covenant assessment, how they should participate and, if necessary, question the outcome.
We help many trustee boards assess their employer covenant. We also have an in-depth understanding of the trustees’ focus, and TPR’s expectations, for this analysis and the funding process in general. We are ideally placed to advise employers on how to participate in and respond to a covenant assessment, and engage in the funding process more generally.
