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Stay ahead of market risk and legislative changes with holistic covenant advice

Sponsoring employers have a legal obligation to financial support their defined benefit scheme both now and in the future. And understanding this covenant should underpin all decisions relating to funding, investment, risk management, and journey planning for your scheme.

Is your trustee board fulfilling your individual scheme covenant requirements effectively?


Catering to your trustee board’s unique requirements

When faced with risk management or investment decisions, you want to be ready. Working collaboratively, we help you stay ahead of necessary requirement and monitoring so you have access to all available information and are prepared to respond swiftly and effectively to changing developments.

Our covenant consultants work together with our actuaries and investment consultants to present holistic advice across all dimensions of risk so that all covenant decisions have a factual basis, agreed by both the trustees and the employer.

We also provide covenant support through corporate transactions, scheme mergers, and other events. And if an assessment is challenged, we can assist in reaching an agreed conclusion and minimising costs. Our covenant services include:

  • Covenant consulting for trustees
  • Covenant assessment for valuations
  • Covenant monitoring
  • PPF certification of contingent assets
  • Transactions and other events
  • Corporate consulting

How we can help

Streamlined assessments

We provide trustees with clear, concise, and proportionate covenant assessments to inform the valuation process. We focus on the key risks in the employer's business, its financial strength, trading performance, and cash flow. And we work to make the process as efficient and painless as possible, making the best use of all available management information.

Reliable monitoring frameworks

Trustees should monitor the covenant each year between valuations in order to quickly respond to any changes of circumstance. We help you devise and implement strong covenant monitoring frameworks that give timely and relevant information to trustees, while not being onerous on the employer.

Cost effective PPF review

When guarantees are used to reduce the Pension Protection Fund levy, trustees must certify to the PPF that they have no reason to believe each guarantor couldn’t meet its obligations. Our cost-effective guarantee review service gives you the evidence you need to meet the PPF's certification requirements with the minimum of fuss.

Wide-ranging advice

Any major change to a sponsor or the scheme itself will have an effect on covenant. Trustees need to consider the covenant impact of events and how to respond in order to protect members' benefits. We advise on a wide range of covenant issues, including corporate transactions, flexible apportionment arrangement funding tests, scheme changes, contingent assets, and asset-backed contribution arrangements, so you can be sure all your requirements are covered.

Corporate advice

We advise employers on positioning covenant and challenging unfair or unreasonable assessments. We can assess the likely covenant impacts of proposed transactions in advance, refining proposals to identify cost savings and ensure smooth processes are implemented.

Ready to talk?

"We recently engaged Buck to provide covenant advisory services. The advice was clear, focussed, helpful and, in my view, good value for money. The recommendations were relevant and realistic, and the convenience of using a service provider linked to our main consultant helped the whole process. I believe that my co-trustees found the advice useful and clearly expressed, and that the sponsor found the experience a positive one (not always something that can be said of covenant advisory work).”

– Independent trustee

Contact us today about covenant consulting

Resources

For additional insights on our covenant consulting expertise, check out our latest thinking.

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COVID and covenant: six months on

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UK covenant impacts of COVID-19

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Brexit – an eleventh-hour trade deal

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The Pensions Regulator’s latest scheme funding analysis

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The Pensions Regulator’s guidance on moving to a DB superfund

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Protecting schemes from sponsoring employer distress

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