Covenant advisory services

The employer covenant is a critical factor in securing members’ benefits and making decisions regarding a pension scheme’s funding and investments. The financial strength of the employer determines the degree of prudence trustees should use in the valuation of the scheme’s liabilities and the level of risk that can be supported in the scheme’s investment strategy. Our dedicated team of experts - who are members of the Punter Southall Transaction Services group - can assist pension scheme trustees in assessing and monitoring the strength of the employer covenant, be that in relation to corporate activities or in the context of the actuarial valuation.

For further detail on the services we provide, including some of our recent case studies and information on our team providing this advice, please download our brochure.



Our covenant advisory services include:
  • detailed covenant assessments to understand the impact of major corporate activities
  • high level covenant reviews to determine the sponsoring employer’s financial position and prospects, the scheme’s security position and the level of prudence needed for scheme funding
  • regular covenant monitoring to make sure pensions scheme trustees are aware of any changes in the sponsoring employer’s financial position
  • ongoing negotiation support to guide pension scheme trustees through discussions with the sponsoring employer

Covenant reviews are triggered by either employer or scheme related activities; the actuarial valuation being the most common example. The events when covenant is a relevant consideration include the following:

  • Scheme events: triennial actuarial valuation, investment strategy review, apportionment arrangements, withdrawal arrangements, transfer value calculations, scheme merger or scheme closure
  • Corporate events: merger or acquisition, divestment, refinancing, restructuring, deterioration of trading performance, dividend payment or share buy-back
Focusing on areas of key importance, we are pragmatic, cooperative and creative in our approach. Our advice is clear and constructive.

 Insights & views

    PPF confirms details of the 2018/19 levy
    23 January 2018
    PPF confirms details of the 2018/19 levy
    On 19 December 2017, the Board of the Pension Protection Fund (PPF) published the Determination setting out how the 2018/19 levy will be calculated. This confirms that the majority of proposals in both the main September consultation and the October contingent asset consultation
    will be adopted. 

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    Corporate Bulletin Quarterly Update - January 2018
    8 January 2018

    In brief 
    - The derivation of the discount rate is not as clear-cut as directors may think. 
    - We examine the future of autoenrolment and the impact it will have on pension savers.
    - The PPF has published levy rules for the next triennium and employers should take actions where they can to minimise their levy payments.
    - The industry is widely accepting that greater clarity is needed regarding the value and costs of investment products and fiduciary management.

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    Pensions Wire Quarterly Summery - January 2018
    3 January 2018
    In this issue
    A quick figure on US gun crime
    Adding some balance to the Barclays debate
    Car insurers welcome Ogden u-turn 
    New guidance on redress for unsuitable DB pension transfer advice

    Read more
    Briefing Note January 2018
    3 January 2018
    Ten key dates for 2018 : 
    After several years of near-constant change to the pensions landscape, 2017 was a (relatively) quiet year for pensions as both Parliament and Government have been tied up with Brexit negotiations. Whilst we have seen consultations attempting to address some long-standing problems with pensions law (most recently in the context of bulk transfers), the legislative framework remains largely unchanged.

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    How do you differentiate your Integrated Risk Management?
    7 December 2017

    ​Sorry for the geeky title, but Philip Hammond did say that there would be ‘more maths for everyone’ as part of his Budget speech. So I thought I’d remind you of some of your school maths as we go through this article, to give a framework to our latest thoughts on Integrated Risk Management (IRM).

    Continue reading here

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    21st Century Trusteeship: Raising Governance Standards
    23 November 2017

    On 18 September 2017, the Pensions Regulator (TPR) formally launched its campaign on 21st century trusteeship, with a new section dedicated to the subject on its website. TPR’s message is clear: trustees who fail to comply will face enforcement action.

    Continue reading here

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    Visit the Industry Insights page for news and views on the latest industry developments
    Speak to us

    Speak direct to our specialists in this area
    Lorant Porkolab
    Head of Covenant Advisory Services
    Or call us on
    020 3327 5000