The Pensions Regulator (TPR) has published guidance encouraging trustees and managers of occupational pension schemes with a defined benefit (DB) element to take proactive measures to ensure that there is adequate protection for their pension scheme. The publication follows recent consultation within the industry.
The guidance focuses on employer covenants – the employer’s legal obligations to a DB scheme and its ability to meet them. It suggests what measures trustees can adopt in order to monitor employer covenants, as well as any subsequent action that should be taken to strengthen the scheme security.
In addition, the guidance highlights how arrangements, in particular contingent assets (where appropriate), can help to provide further safeguards alongside employer covenants.