Pensions - Articles - PwC comment on tPR's guidance on employer covenant

 "It is excellent to see new employer covenant guidance being issued by the Pensions’ Regulator. Market practice has moved on considerably over the last few years and the new guidance reflects this.

 "The increased importance of employer covenant and the large number of pension schemes where the covenant is still not strong is a key reason why we recently asked Stephen Soper (ex CEO of the pensions regulator) to join PwC’s pensions credit advisory team as senior pensions adviser.

 "More than ever, this guidance puts employer covenant at the heart of the valuation process. It will make any Trustee board think hard about conducting a valuation without a thorough understanding of their employer covenant.

 "The regulator has been careful to ensure a proportionate approach is taken. For those schemes with a stronger employer covenant, trustees can be pragmatic about how much work is done. However, where the strength of the employer covenant is uncertain it is very clear that Trustees need to get under the skin of the business and really understand the covenant.

 "This guidance will highlight to some Trustee boards that their current funding strategy is unlikely to work and a more radical solution to the pension scheme may be required."