Grant Thornton UK LLP and Trustee Solutions Limited have unveiled a new booklet Understanding covenant assessments and refinancing proposals, which aims to simplify some of the key issues facing pension trustees when trying to assess the covenant, an employer's statutory obligation to continue funding the pension scheme it sponsors.
The economic downturn has had a downward effect on the investment returns necessary for the health of a pension scheme. It is therefore vital that trustees review the employer covenant on a regular basis. This new booklet offers pension scheme trustees advice and information on how best to manage a scheme's funding requirements proactively. Among the subjects covered are how to assess an employer's underlying performance, how to interpret company financial information and there is an extensive glossary of frequently used technical terms.
Susan Andrews, Partner at Trustee Solutions Limited, added: "Pension schemes are struggling with their investment returns and in such circumstances, they expect the employer to make up the difference. Scheme trustees must be in the best possible state of readiness to ensure the employer is able to fulfil its obligations to the scheme."
Darren Mason, Partner at Grant Thornton UK, commented: "A regular assessment of the covenant an employer provides to the pension scheme is no longer one of those things that is optional or discretionary. It is now essential and trustees need to have a more complete understanding of how to evaluate their sponsor's underlying performance and interpret the forecasts it provides."
A free copy of the Understanding covenant assessments and refinancing proposals booklet is available for download at:
www.grant-thornton.co.uk/publications, or at http://www.trusteesolutions.co.uk/publications_and_legal_updates.aspx
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