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

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    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).

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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.

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    Budget 2017
    22 November 2017

    The Chancellor of the Exchequer, Philip Hammond, gave his first Autumn Budget speech this afternoon and, despite there having been a significant amount of speculation in the media that there might be changes to pensions tax relief, there were no major announcements affecting pensions.

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    DWP consults on DC bulk transfers without consent
    20 November 2017
    26 October 2017, the Department for Work and Pensions (DWP) published draft regulations as part of a consultation to simplify the process for DC bulk transfers without member consent.
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    Pension Protection Levies 2018/19 Year and Beyond – Update
    31 October 2017
    On 27 September 2017, the PPF issued its response to its March consultation as well as a draft determination setting out further proposals for the 2018/19 levy year.
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    Investment Quarterly Update : October 2017
    31 October 2017

    Market uncertainty continues in Q3 with some key market indices reaching record highs competing against political tensions and destructive natural disasters. Will markets continue to climb or are they overvalued? 

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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