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Back in June of 2010 The Pensions Regulator published a statement for trustees of defined benefit pension schemes. The memorandum details guidance for managing employer covenants and the best way to support a scheme. The Pensions Regulator has been very careful to outline exactly what is expected of a trustee in the role of overseeing an employer covenant. Every trustee should monitor the strength of their sponsor's covenant regularly. Having this 'hand in' to a scheme will give trustees the knowledge and tools to respond to any given scenario. A trustee should understand the sponsor's business and set in stone 'trigger points' for agreed action. Trustees should consider: - How they measure and monitor their sponsored covenants - Assessment measurements, benchmarks and action plans for recovery - Look into ways to strengthen schemes and safeguard the assets - Understanding who is responsible for multi-employer schemes and the liabilities Regardless of the size of a scheme, a trustee must carry out regular employer covenant reviews and ensure that all those involved in the scheme are safe guarded against possible deficits.
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