Our team of pension experts can advise trustees and sponsoring employers on the most complex issues surrounding employer covenant assessment, scheme specific funding and the pensions transaction clearance procedure.
As part of our advice, we will deliver an accurate and individual analysis of a scheme's covenant, providing sufficient and appropriate evidence to conclude the financial strength of its sponsoring employer/s and their ability to make good any the deficit or future shortfall in investment returns.
Changes in Pensions legislation require trustees of defined benefit pensions schemes to closely monitor the covenant afforded to the scheme by their sponsoring employers and react to 'Type A' events. We have considerable experience in this area advising both trustees and employers.
Grant Thornton has a proven track record as adviser to negotiations involving trustees, employers, lenders, the Pensions Regulator and Pensions Protection Fund. We bring a unique insight into the Pensions Regulator and Pension Protection Fund from our close working relationship and multiple secondments into these organisations. Our services include:
- provide trustees with a clearer understanding of the financial position of the sponsoring employer through the provision on an independent employer covenant assessment;
- help trustees to assess the likely return in the event of the failure of the business and identify the level of contributions the sponsoring employer may reasonably afford
- apply insights from sector specialists to complement our quantitative analysis;
- assist with the negotiation of a recovery plan or appropriate mitigation for a corporate transaction which is deemed to have weakened the employers’ covenant
- advise on Clearance Notice issues and pension scheme security changes in corporate transactions
- advice on pension scheme deficit management strategies
- negotiate Scheme Specific Funding for either employers or trustees
- assess the consequences of a corporate transaction, refinancing or reorganisation on the strength of a sponsoring employer's covenant;
- identify unencumbered assets available to indirectly support a pension scheme;
- advise on the impact of the crystallisation of s75 debt on the withdrawal of an participant from a multi-employer scheme;
- assist with negotiations or communications with the Pensions Regulator or Pensions Protection Fund.
For lenders or other stakeholders
Pension scheme de-risking
As corporate sponsors and trustees look to remove or reduce the risks involved in running their defined benefit pension schemes, we can advise on all aspects of de-risking a pension scheme, including use of some of the most complex and innovative solutions in the market, such as:
- deferred premium pension buy-ins
- longevity swaps
- collateralised pensioner buy-ins
We understand the pension de-risking and buy-out market inside out, having experience of structuring investment and insurance based de-risking products on behalf of banks and insurance companies. We also have experience in working on behalf of trustees and the employer in relation to the on-going valuation of the pension scheme. This means that we understand the basis behind the cost of operating the pension scheme and we are able to factor in this basis when negotiating with de-risking providers on the premiums they charge for de-risking.
- assess the impact of a pension scheme deficit and liabilities or any potential corporate transaction, refinancing or reorganisation of a business or group.