The events of Q4 2022 have been a timely reminder that, no matter how well funded their defined benefit (DB) pension scheme, pensions risk is still very much a risk to the business (the sponsoring employer) that sits behind it.
Covenant: Don’t get caught out by regulatory changes. 2023 is likely to be the biggest year for regulatory change in the defined benefit (DB) world since 2014 (the implementation of the Funding Code of Practice 03), or even since the Pensions Act 2004.
The great divide. Pension scheme trustee boards and sponsoring companies will wake up on 1st January in a very different place to where they were a year ago.
As a covenant advisor in the post-2008 financial crisis world, I’ve spent the last decade focused on employer-related events and what they mean for the employer covenants within my trustee client base. Hamish Reeves, Director, Cardano Advisory.
Discover: AI powered covenant. Complexity and cost often put traditional covenant assessments out of reach for smaller schemes or scheme sections. This can be a problem given the importance of covenant to member outcomes, increased focus from The Pensions Regulator (TPR) on covenant, and draft DWP legislation requiring trustees to assess covenant strength.
Cardano Group response. The draft Regulations are heading in the right direction in seeking to support trustees and employers in planning their scheme funding over the longer term and we are supportive of the intention to improve risk management through covenant-driven investment and funding strategies and a long-term objective of reducing reliance on covenant.
Whilst insurers are exposed to the same array of risks as DB schemes, we expect them to be better placed to deal with the recent market turmoil than most pension schemes. Here we explain why.
Eyes are on investments and pension scheme liquidity, what does this mean from a covenant perspective? Here are four things trustees can be doing right now.
Pension risk transfer market: Entering unchartered territory. The UK pension risk transfer market is arriving at a unique juncture, driven by evolving supply and demand factors, regulatory change, and macroeconomic and capital market volatility. The impact on end game strategies could be far reaching.
2022 began with the hope of reduced market uncertainty: COVID-19 has been on the decline, and a general pick-up in economic activity has been observed. In practice, the year is being shaped by macroeconomic and geopolitical headwinds, and against the prospect of stagflation over the horizon.
