All Covenant articles
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OpinionDB surplus release: Three key questions to drive better outcomes
The government’s plan to permit the extraction of surplus assets marks a pivotal moment for DB pensions but needs careful handling, writes Alex Beecraft of the Society of Pension Professionals.
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NewsDon’t ignore covenant risk, says SPP
Well-funded defined benefit (DB) pension schemes must still retain a focus on covenant risk even though they may be relying less on their sponsors, according to the Society of Pension Professionals (SPP).
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NewsTPR warned of ‘levelling down’ in DB funding code consultation
Respondents to the Pensions Regulator’s first consultation on its imminent defined benefit funding code have told the watchdog of their concerns over schemes “levelling down” to meet its fast-track valuation pathway, as well as noting their fears over a loss of flexibility.
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NewsSmaller schemes face ‘significant’ costs with TPR DB funding code
While the Pensions Regulator foresees an initial hike in implementation fees followed by reduced costs in the long term, experts have warned that the new defined benefit funding code will be particularly onerous for small schemes.
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NewsTPR ‘dials down leverage’ in DB funding code fast-track
The Pensions Regulator has lowered the amount of leverage that it deems acceptable for schemes to have to meet the requirements for a “fast-track” valuation, as part of its new defined benefit funding code.
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NewsBigger LDI collateral buffers will increase sponsor reliance, MPs told
The Work and Pensions Committee has been reminded of the trade-off between bigger collateral buffers and investment returns, with one chief executive warning that buffers of 400 basis points would force some schemes to “pare back their growth ambitions” and increase their reliance on sponsor contributions.
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NewsTwo-fifths of sponsors uncertain on accounting for Covid-19
On the go: A significant proportion of defined benefit pension scheme sponsors are still working out whether and how to make an allowance for Covid-19 in their year-end accounts due to a range of issues, according to LCP.
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NewsProfit warnings from DB sponsors jump 38%
On the go: Profit warnings issued by UK-listed companies with defined benefit pension schemes increased by 38 per cent year on year in the third quarter of 2022.
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NewsAcademics back strike action over USS ‘pension cuts’
The Universities and College Union has secured a mandate to strike in 150 universities over member benefit cuts in the Universities Superannuation Scheme.
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NewsClara-Pensions expects consolidator competition ‘within a year’
On the go: The commercial consolidator Clara-Pensions expects to see other offerings providing competition in the market “in a year’s time”, according to chief executive Simon True, despite the “unhelpful economic environment”.
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NewsEmployers face contribution calls to maintain schemes’ hedging ratios
The sponsoring employers of defined benefit pension schemes look set to be called on for advances of contributions or additional funding, as schemes seek to preserve their liability hedging and lock in their improved funding levels.
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NewsEmployer DC contributions to exceed DB ‘in 5 years’
On the go: The expected decline of sponsor contributions towards defined benefit pension schemes should see businesses’ defined contribution payments outstrip these within five years, according to new research.
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NewsTPR advises employers to shield schemes from refinancing costs
On the go: Companies and pension scheme trustees should take steps to protect their schemes and their employer covenant from the fallout of any refinancing that they have undertaken, according to David Fairs, the Pensions Regulator’s executive director of regulatory policy, analysis and advice.
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NewsSPP warns of covenant ESG risk, Scottish Widows issues ultimatum
ESG spotlight: A roundup of the latest news on environmental, social and governance initiatives, including the Society of Pension Professionals’ new guide to ESG, and Scottish Widows’ stewardship demands of its asset managers.
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NewsAon and Mercer issue ‘urgent’ call to action over LDI strategies
Consultancies Aon and Mercer have urged pension schemes, trustees and sponsors to prepare to intervene to protect their schemes, as bond market volatility puts strain on liability-driven investment strategies.
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NewsTrustees urged to include ESG factors in covenant assessment
On the go: Accounting for Sustainability and the Employer Covenant Practitioners Association have teamed up to launch a “top tips” guide for considering environmental, social and governance risk in the employer covenant process, hailed by the Pensions Regulator chair Sarah Smart as “an important first port of call for trustees”.
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NewsCost of discretionary increases to combat inflation could hit £18bn
The cost of awarding discretionary increases to members could now add £18bn to defined benefit schemes' liabilities, experts have warned, as inflation continues to rise.
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NewsFirstGroup ends deficit payments and expects £117mn return
On the go: Transport operator FirstGroup does not expect to make any further contributions towards its defined benefit pension schemes, after asset sales helped push the schemes into net surplus.
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NewsNearly a third of DB trustees think net zero ‘isn’t relevant’
On the go: Thirty per cent of defined benefit pension trustees think efforts to push their schemes towards net zero emissions “isn’t relevant to them”, according to new research.