Pensions - Articles - Deloitte comments on tPR's guidance on employer covenant

 “The guidance reinforces the principle that assessing covenant, including an appreciation of wider market dynamics, is not a ‘one-off’ process. Monitoring should be in force, along with appropriate triggers, to ensure that trustees can react nimbly and appropriately to changes in covenant. This monitoring should run alongside planning for potential outcomes in investment or funding assumptions, through ‘stress-testing’.

 “The guidance also puts objectivity centre stage, very clearly flagging that the regulator would expect the trustees to bring in external advice where there is a ‘failure to agree’ with an employer or a conflict of interest on the trustee board.

 “Complex modelling can be interesting, but ultimately whether a sponsor can fund the scheme from cashflow now and in the future is the key. While there are no new revelations in today’s documents, we believe that this guidance will be helpful for trustees, sponsors and their advisers in offering checklists and examples of situations they may find themselves in.”