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Covenant Services

The Willis Towers Watson Covenant Advisory team has a core background in complex corporate restructurings and the provision of advisory services to large creditors and corporates. Our clients range from small, single-employer schemes to complex multi-employer schemes with over £5 billion of liabilities. The team has a wide range of sector experience as well as expertise in dealing with both the Pensions Regulator and the Pension Protection Fund, where members have spent time on secondment.

An objective assessment of covenant is key for valuations, journey planning and understanding the impact of corporate activity.

We provide a proportionate and balanced analysis, with clear opinions and recommendations on all aspects of an employer’s financial affairs, including their business model as well as short- and medium-term outlook and their legal obligations to the scheme. We provide a clear steer on the level of contributions that might be considered appropriate in the context of the scheme and the security provided by the sponsor’s support.

We can support you in a number of areas, including:

  • Setting out the strengths and vulnerabilities of the employer covenant as well as providing specific suggestions on how to work collaboratively to mitigate risks.
  • Supporting you in your own covenant assessment process.
  • Evaluating the sponsor’s ability to fund a scheme appropriately in ‘business-as-usual’ and stress conditions, including considering the scheme’s impact on the sponsor.
  • Designing and delivering covenant solutions in normal and distressed situations.
  • Advising on contingent assets and other covenant strengthening mechanisms.
  • Assessing the impact of scheme restructuring and corporate transactions as well as advising on mitigation options where appropriate.
  • Facilitating constructive and collaborative dialogue between you and the employer.

As trustees, we face some probing challenges from tPR following the implementation of an apportionment arrangement. The covenant team at Willis Towers Watson took a pragmatic approach and provided commercial advice that quickly allayed tPR concerns, drawing a line under the matter, thus saving the trustees both further time and costs.”

The chairman of the trustees, oil and gas sector scheme
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