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Covenant and Sustainability services

What can we offer you?

We are a leading provider of covenant and related advisory services for defined benefit pension schemes. Over the years we have broadened our services as the market has evolved and we now have specialists in other related areas including corporate finance, journey planning, litigation, restructuring and risk transfer.

 

We have won many awards, most of which are for our covenant advisory services and, more recently for innovation and thought leadership.

 

Working closely with trustees, sponsors, investors and other stakeholders across a wide range of sectors, we provide innovative solutions to help deliver safer financial futures.

Covenant reporting, monitoring and advice

Employer covenant is the strength of the business supporting a pension fund. It is defined by The Pensions Regulator as ‘the extent of the employer’s legal obligation and financial ability to support the scheme now and in the future’. It is the ultimate support for the funding and investment risks faced by a pension scheme. Understanding the quality of this support and the risks associated with it is fundamental to fully integrated risk management. It’s at the heart of what we do.

ESG and sustainability integration

Most pension scheme sponsors face challenges from environmental, social and governance (ESG) factors – climate change in particular. While much thought has gone into identifying sustainable investment, trustees and sponsors are also now beginning to think about the impact of ESG risks on the employer covenant.

 

 

 

Corporate events

Certain events in a company’s lifetime can move quickly, can be extremely complex and may well require trustees to be more closely involved in the process than ever before. Moreover, certain high-profile transactions may see pension trustees being thrust into the public spotlight and becoming subject to greater scrutiny from The Pensions Regulator. Responsive, expert guidance from a covenant advisor is essential at such times.

 

 

Covenant risk solutions

As trustees progress in their journey to improve their funding levels and start thinking about transferring the economic risk to another party, so counterparty risk becomes a key risk factor. Historically, this journey has generally ended with a decision to enter into an insurance policy with a regulated insurer, which in effect transfers the economic risk from the scheme and from the sponsor through the covenant to the insurance company. Our unique approach enables trustees to directly compare insurers across a range of key risk factors.

 

 

 

 

 

 

 

 

 

 

Regulatory advisory and litigation support

The defined benefit (DB) pensions world is evolving. Potential conflicts between the funding needs of maturing schemes, investors and businesses under pressure from dynamic competitors and a rapidly changing macroeconomic environment will inevitably create disputes, some of which will require litigation to resolve. Meanwhile, high-profile business failures such as BHS and Carillion have dramatically shaken up the landscape for corporates with DB schemes, driving new powers and a more interventionist attitude – clearer, quicker, tougher – on the part of The Pensions Regulator. As The Pensions Regulator becomes more active in exercising its powers and seeks to engage more extensively with trustees (and with criminal sanctions now coming into force), we are helping more and more trustees and sponsors to understand and respond to regulatory intervention – and ensure they stay on the right side of the line.

Restructuring and special situations

Whether you are a trustee, a company director or a financial stakeholder, restructuring situations can be difficult landscapes to navigate. Restructuring a business with a defined benefit (DB) pension scheme is possibly even more complex. You will generally need to assess the options for managing and/or compromising pension scheme liabilities through a range of restructuring solutions. You will need to understand the impact on the employer’s covenant and how it might be mitigated. You will also need to get a handle on the ‘moral hazard’ risks associated with restructuring plans, particularly if the outcome is likely to be highly adverse to the scheme. With their up-to-date knowledge of the changing regulatory landscape, our specialists are ready to help you to deliver creative solutions which optimise outcomes for all stakeholders.