Pensions - Articles - Pensions Regulator covenant guidance - comment from JLT

 “We are very supportive of the Regulator’s increased focus on the importance of employer covenant. Trustees need to build covenant risk into their funding and investment strategies, and covenant needs to be monitored regularly.

 “One could take the view that a deficit is effectively an investment in the sponsoring employer’s health (its covenant). As it is an investment that cannot be sold, it should be monitored at least as closely as, if not more than, other investments.

 “This publication is of significance for the entire pensions industry. It is in the benefit of every pension scheme and their sponsors that employer covenant risk is well managed across the board, as the bailout cost of badly run schemes - through the PPF levy - is huge.”