Measuring the strength of the Sponsor Covenant

The key risk faced by Trustees of defined benefit pension schemes is that the Scheme will survive longer than the Sponsor. The Pensions Regulator requires Trustees to form an objective assessment of the employer's financial position and prospects - the Sponsor's Covenant.

WestPier Consultants believe that “assessment” means more than an expert opinion in words or a rating expressed as a number of stars. A numerical quantification – the probability of insolvency – is required. Put simply, what gets measured gets managed.

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