As schemes get better funded and more mature, the role of the covenant advisor, and how we all think about covenant, needs to change. It’s no longer about a simple rating, on a scale of weak to strong, it’s about the “so what”.
Covenant is the ultimate underpin for scheme risks, so covenant risk management is a really important part of making sure your members get their benefits in full.
To challenge your thinking on this topic, we have produced four short videos for you to watch.
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The new paradigm
As schemes get better funded, and more mature, their investment strategy and actuarial assumptions are increasingly defined by a de-risking strategy in the context of a journey plan. In that context, covenant analysis focuses less on near-term affordability of cash contributions and attention turns to the ability of the sponsor to underwrite longer-term risk. That is the new paradigm.
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The new paradigm
As schemes get better funded, and more mature, their investment strategy and actuarial assumptions are increasingly defined by a de-risking strategy in the context of a journey plan. In that context, covenant analysis focuses less on near-term affordability of cash contributions and attention turns to the ability of the sponsor to underwrite longer-term risk. That is the new paradigm.
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Covenant risk management in practice
It is important to look forward, rather than just focusing on the numbers that are easily to hand. Here we share some of the key concepts we use in practical covenant risk management.
Covenant risk management in practice
It is important to look forward, rather than just focusing on the numbers that are easily to hand. Here we share some of the key concepts we use in practical covenant risk management.
This content is available after accepting the cookies.
This content is available after accepting the cookies.
Corporate transactions and covenant risk management
Here we focus on corporate transactions, specifically in the context of covenant risk management. As you’d expect, the new Pension Schemes Act is high on the agenda when we think about corporate transactions.
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Corporate transactions and covenant risk management
Here we focus on corporate transactions, specifically in the context of covenant risk management. As you’d expect, the new Pension Schemes Act is high on the agenda when we think about corporate transactions.
This content is available after accepting the cookies.
Covenant risk transfer
As schemes mature and funding levels improve, focus shifts away from the employer’s ability to make deficit contributions to the search for a stable, long-term home for members’ benefits. In recent years there has been a concerted effort to increase the number of options available to trustees and sponsors as they approach their endgame.
Covenant risk transfer
As schemes mature and funding levels improve, focus shifts away from the employer’s ability to make deficit contributions to the search for a stable, long-term home for members’ benefits. In recent years there has been a concerted effort to increase the number of options available to trustees and sponsors as they approach their endgame.
This content is available after accepting the cookies.
