Transactional covenant
support for trustees 

Case studies

The background

Our client is the trustee of a scheme which faced a number of key challenges prior to our appointment, including the deterioration of the sponsoring employer’s trading performance, corporate transactions (various disposals / acquisitions) and dealing with correspondence from TPR regarding the strength of the employer covenant.​

The trustee was also aware that the management team was considering further business disposals and was keen to agree in advance the portion of the proceeds that would be allocated to the scheme in that scenario. This was particularly relevant given the level of covenant leakage that had occurred in the past. 

Our solution

We assessed the available information and concluded that the covenant had materially deteriorated over the intervening period. In addition, the Scheme was not being treated equitably with other stakeholders, particularly in relation to how the disposal proceeds from recent business disposals had been utilised. ​​

We provided key support to the trustee by successfully negotiating a mechanism that would secure a pre-agreed percentage of future disposal proceeds for the scheme.

The results

This arrangement turned out hugely beneficial for the scheme. Two years later, a significant disposal occurred, and the mechanism we had advised upon ensured that the scheme received an equitable portion of the sale proceeds.

Consequently, the scheme is now nearly fully funded, demonstrating the tangible benefits of our strategic planning and the successful negotiation we facilitated on behalf of the trustees.​

Chart your own course

Chart your own course

A tale of two journeys

In this report, we address the issues that pension schemes are facing today, provide tips on how to overcome them and prioritise different steps depending on your scheme’s position.

Read the report

How we can help

We help sponsors of pension schemes understand and manage the costs and risks associated with supporting their current and legacy pension schemes as well as other employee benefits.

We help trustees understand and monitor the employer covenant.

We help pension scheme trustees and sponsors to determine the ultimate destination for their scheme and help them put together a plan to get there, including how to effectively manage the risks they face along the way.

We help trustees achieve their strategic goals, with solution-led, appropriate advice.