Covenant assessment services
A pension deficit can present a major obstacle to a company's overall health and can also be a sensitive matter that requires discrete expert guidance and experienced negotiation, even more so in the current economic climate.
Our industry award-winning Covenant Assessment Services (CAS) group has UK-wide expertise in supporting trustees and employer companies of defined benefit schemes and provides assistance to them in overcoming difficulties within the complexities of pensions legislation.
Our
credentials (Download PDF 306kb) include acting for £billion-plus multi-employer schemes, through to single employer schemes with assets of £10 million and below. Whatever the scale, the same quality of input and output is assured.
Our CAS group, is an integral part of Baker Tilly’s national leading
Pensions group, which draws together our expertise and services in working with the industry from across the firm. In the UK, Baker Tilly acts for more than 1,000 occupational schemes and readily engages with the industry through membership of a number of pensions associations.
Meet our Covenant Assessment Services team (Download PDF 712kb)
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- To enable the trustees to satisfy The Pensions Regulator – the regulator has said it is essential for the trustees to form their own objective assessment of the employer’s financial position and prospects and the willingness to continue to fund the Scheme’s benefits.
- Scheme Specific Funding review – testing the employer’s financial durability and its ability and willingness to meet its financial commitments to the Scheme including negotiation of a suitable recovery plan. We are able to look, if applicable, at the wider Group position and potential for access to security and/or other contingent assets to strengthen the Scheme’s position.
- Ongoing monitoring of the covenant – always required but particularly closely during difficult trading conditions for the sponsoring employer, when the strength of the covenant could rapidly change.
- A one-off corporate transaction or event – likely to have a significant impact on the strength of the covenant offered to the Scheme.
- A need to alleviate possible conflicts of interest – are all trustees objective enough or too close to the employer to carry out an objective review of the covenant?
- Reducing the risk – that trustees face in terms of personal liability for a fund’s shortfall in the event the sponsoring employer fails.
Our conclusions on the strength of the employer covenant are graded using an indicative five-level scale ranging from strong to weak. The grading of the covenant strength then feeds in to our guideline matrix of relevant actions recommended for implementation, including:
- Setting funding and investment risk parameters (in conjunction with Scheme actions).
- Negotiating and agreeing affordable contribution levels and a deficit recovery period.
- Requesting and obtaining formal security or other contingent assets.
- Establishing the level and focus of monitoring activity required on an ongoing basis.
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- An award-winning provider of covenant review advice
- Bespoke independent covenant reviews, tailored in scope and depth according to the scheme circumstances
- A dedicated team with a strong and relevant track record
- Resourceful and competitively priced
- A truly partner-led service, offering accessibility to partners and senior staff at all times
- A collaborative, constructive approach – exploring ideas and solutions not mere issues diagnosis
- Access to extensive global expertise across the Baker Tilly International network as appropriate.
Related links
This, our third survey to date, highlights how pension scheme trustees are coping with, and responding to, continuing economic volatility.