This statement is for trustees and sponsoring employers of occupational defined benefit (DB) pension schemes. It is particularly relevant to schemes with valuation dates between 22 September 2021 and 21 September 2022 (known as Tranche 17, or T17 valuations).
It is also relevant to schemes undergoing significant changes that require a review of their funding and risk strategies.
Published: 27 April 2022
Executive summary
Trustees will be approaching Tranche 17 valuations against an economic background of high inflation, high energy prices, higher interest rates and slower economic growth – all of which may impact on their pension scheme funding and employer covenant.
How the situation in Ukraine will evolve, and the impact it will have on the global economy, is unclear. In addition to an immediate effect on liquidity demands and cyber risks, the longer-term impact on funding positions could be significant. The employer covenant could be impacted directly by sanctions or indirectly through the employer’s customer base and supply chain. For many businesses, these factors may be compounded by the lingering effects of COVID-19 and Brexit. An open dialogue with management when assessing the employer’s covenant is important.
While we can see the effects of COVID-19 on the scheme’s recent mortality experience, the longer-term impact on future mortality trends continues to be an area of uncertainty, attracting different views.
These broad risks emphasise the importance of robust risk management across all areas of a scheme’s assets, liabilities and covenant. The actuarial valuation is an opportunity for trustees to reconsider if funding plans are appropriate and effective monitoring mechanisms are in place. It is also a good time to seek future protections such as (but not limited to) contingency plans and dividend-sharing mechanisms.
Favourable investment conditions over the last three years may mean that, for many schemes, their funding levels are ahead of plan, but not for all. Over this period, we expect the impact of hedging to have had a wider dispersion of outcomes than usual, with some schemes benefiting more than others, depending on the level of inflation hedging and inflation linkage in benefits. However, we note that hedging itself is not intended to provide outperformance, but is employed in effective risk management to reduce downside risks and volatility.
Trustees should consider their long-term funding target (LTFT) and their journey towards it. Where schemes are in deficit against their technical provisions (TPs), they should focus on recovering the deficit and managing their risks. Where schemes have recently achieved full funding of their TPs, or are expected to do so soon, trustees should consider how their liquidity needs will change in the absence of future contributions from the employer. They should also ensure that their journey plans remain appropriate and focus on managing other risks through contingent funding plans linked to suitable triggers. If they are concerned about longer-term covenant risks, they should consider alternative funding and investment strategies that reduce longer-term covenant reliance.
Trustees should remain alert to their scheme’s funding positions and covenant changing very quickly – especially in the current environment. It is important to understand key risks to their scheme and the effectiveness of their strategies to manage them. These risks are often connected by the same underlying factors (for example inflation, interest rates or climate risks), so trustees should consider their impact on the scheme and the employer’s covenant in an integrated way. Scenario planning is a useful way of considering this to provide insights to the key aspects of funding strategies like de-risking, journey planning and contingency planning.
Each scheme should consider its position depending on its own circumstances. In this statement we have set out guidance to enable schemes to focus on the following.
- Considering how market uncertainties impact the employer’s covenant and our expectations of scheme trustees, depending on how impactful these events are on the covenant.
- Considering the impact on scheme assets and liabilities from the current high and rising inflation rate, as well as greater volatility in the investment markets.
- Setting out our views on reasonable long-term mortality assumptions in the absence of sufficient evidence or a robust assessment of the long-term effects of COVID-19.
- Highlighting, in the accompanying tables, the key risks we expect trustees and employers to focus on, and actions to take, depending on the scheme’s funding strength, maturity, and strength of the employer covenant. The tables are the same as last year, except the reference to the length of the recovery plan has been updated to six years. This is to reflect that recovery plan lengths have decreased over recent years (the average is now less than six years across all valuation tranches).
We continue to emphasise the importance of integrated monitoring, and for trustees to be alert to shareholder distributions and other value leakage to ensure fair treatment for the scheme, as well as being alert to any corporate activity and to seek mitigation where appropriate.
We expect all T17 valuations to fully incorporate the principles in our current DB code of practice and associated guidance. You should therefore read this statement alongside the following:
- funding defined benefits code
- guidance on DB investment
- guidance on assessing and monitoring the employer covenant
- guidance on integrated risk management (IRM)
Trustees should also be aware of the following:
- our guidance for trustees protecting schemes from sponsoring employer distress
- our climate change guidance
- step-by-step example of following the climate change guidance
Supplementary guidance aimed at trustees of smaller schemes with limited resources highlighting the benefits of IRM and how to meet their main objectives through its application, is available at:
Introduction
This statement is for trustees and sponsoring employers of occupational DB pension schemes.
This statement aims to:
- set out specific guidance on how to approach valuations under current conditions and is particularly relevant to schemes with valuation dates between 22 September 2021 and 21 September 2022 (Tranche 17), and all schemes undergoing significant changes that require a review of their funding and risk strategies
- highlight our views on general risk management practices, regulatory developments and current issues facing schemes, which are expected to have a bearing on pension scheme management
Approximately 25% of valuations in this tranche take place at dates around 31 December 2021, and a little over 50% take place at or near 31 March 2022. Our analysis indicates that, at both 31 December 2021 and 31 March 2022, the aggregate funding level for all T17 schemes was ahead of that expected three years previously. However, the position for individual schemes will vary greatly compared with our aggregate estimates and depend on scheme-specific factors, including hedging levels.
The analysis supporting this statement will be published shortly.
Considerations for schemes currently undertaking a valuation
Trustees will be considering T17 scheme valuations during a period of significant economic uncertainty, which could have an impact on the employer covenant and scheme investments. This can manifest in a range of ways, including (but not only) the following.
- High rates of inflation may increase other costs for employers (such as materials), which may be particularly impactful where these cost increases cannot be passed onto customers. In addition, inflation rates may substantially increase pension scheme liabilities or have material impacts on investment asset values. The impact will vary for different schemes and employers.
- A shortfall in oil and gas is driving higher global energy and fuel prices, which could significantly impact the profits of employers which use large amounts of energy.
- The potential for further increases in interest rates could result in increased borrowing costs for the employer, as well as impacting the scheme’s assets and liabilities.
Employer covenants and scheme investments may also be directly impacted by the following significant events.
- Russian and Ukrainian conflict: the ongoing events in Ukraine and the associated sanctions have added to uncertainty for trustees as they consider what impact this may have on their scheme’s investment, risk management and employer covenant.
As we have previously highlighted, for most schemes, investments linked to Russia and Ukraine are likely to form a small or negligible proportion of investments. However, indirect impacts on inflation, interest rates, asset prices, volatility and liquidity within investment portfolios may have a much larger impact on a broader range of assets.
From a covenant perspective, certain sectors may be more directly impacted, particularly those that are heavily exposed to Russian or Ukrainian commodity markets (for instance oil and gas, wheat and metals). However, employers could be impacted indirectly, for example if their supply chain and/or customer base are impacted. This may not be immediately obvious, so trustees should continually engage with management to understand how employer trading may be affected.
Where an employer is impacted by sanctions, trustees must understand the impact on short-term employer liquidity as well as any longer-term impact on the covenant. These sanctions could also directly impact the scheme (for example, if its bank account is also frozen), which could restrict its ability to pay pensions and other expenses.
- COVID-19: employer operations may still be disrupted by the impact of COVID-19, for example if supply chains are disrupted by ongoing lockdowns (such as in China). More broadly, the withdrawal of COVID-19 related government support and the recovery of trade means that some employers may be experiencing working capital pressures. This may be exacerbated by the need to repay COVID-19 loans. Additionally, the health effects of COVID-19 have the potential to affect pension scheme liabilities, with the long-term effects still uncertain.
- Brexit: some businesses are still assessing the impact of Brexit on their competitive position, supply chain, and access to the European market and its labour forces. While some businesses have been planning for Brexit for several years, the true impact may not be fully understood until regulatory issues are clear and the impact of COVID-19 on trade has normalised.
Covenant considerations
As market volatility continues, businesses are becoming more polarised in the way they have been able to react to these events. While some have not only survived, but also thrived, others continue to be materially impacted and/or exposed to broader market uncertainty (as set out above).
Although it is becoming increasingly difficult to differentiate between the impact that any single market event may have versus another, trustees should consider the overall impact these may have on the employer’s business, and categorise this in one of three ways.
- Current market events have had limited impact on the business. There has likely been no balance sheet weakening and cash flow has remained strong.
- Current market events have had a material impact, but trading has recovered or is recovering strongly, or some impact is anticipated but expected to be short-lived. Any weakening of the balance sheet can be repaired over a short period, and the medium-term prospects have not been negatively impacted.
- The impact of current market events continues to be material. The pace of recovery is uncertain and could take years, or the business may never fully recover. Short-term affordability is stressed. The balance sheet has weakened due to measures taken to raise additional liquidity and to secure lender support. Medium-term prospects are unclear.
These categories are broadly similar to those in our Annual Funding Statement (AFS) 2021, and our guidance for these groups remains relevant (as does our guidance for schemes whose employers are experiencing corporate distress or acute, near-term affordability restrictions – protecting schemes from sponsoring employer distress guidance).
Trustees should consider obtaining independent specialist advice to help them understand and monitor their employer covenant, particularly if the covenant is complex or deteriorating, or if it has been materially impacted by the current market events (in line with category 3 above).
However, professional advice may not always be readily accessible to trustees of smaller schemes. For them, a strong source of information will be employer management, and an open and ongoing sharing of information will be fundamental to schemes ensuring that they operate as well as possible during these uncertain times.
Forecasts and scenario planning
It is important that employers provide trustees with financial projections and business plans to enable them to assess the employer covenant. If this information changes, the employers should let the trustees know as soon as possible.
However, given recent trading volatility, it may be difficult to test management’s forecast assumptions against prior year performance. This places even more importance on trustees engaging with management to understand the key variables and factors driving the forecasts.
Trustees should continue to undertake stress testing or scenario planning to understand the impact on the covenant of possible future economic environments (remembering that the impact of the same scenario on the scheme’s funding position may be different). Such scenarios many include prolonged high inflationary and high interest rate scenarios, and (where relevant) any impact from the ongoing conflict in Ukraine.
Working from the different business and economic scenarios already considered by the employer can be an efficient way to do this. This should enable trustees to consider how covenant support and affordability may be affected under appropriate scenarios. It is good practice for trustees to consider more than a single set of forecasts, especially where uncertainty over future trading is high.
It is also important that trustees regularly monitor actual versus forecast performance and, where possible, agree contingency plans to enable them to respond quickly to any events that may be materially detrimental to the covenant.
Recovery plans and affordability
Current market challenges, and how employers respond to these, will directly impact how employers are able to support their pension schemes. Trustees should consider the following, in line with the three categories above.
- Where market conditions have had limited impact on the employer’s business, we expect trustees to take a 'business as usual' approach to setting recovery plans. We would not generally expect deficit repair contributions (DRCs) to be reduced or recovery plan end dates to be extended. Where possible, we expect trustees to try to reduce the length of recovery plans. This is true for all schemes, but especially where they are long and where there are concerns the scheme is being treated inequitably relative to other stakeholders.
- Where employers are experiencing short-term affordability constraints, trustees should carefully consider any requests to accept a temporary reduction in contributions. We expect any such request to be short term, with higher contributions in subsequent years limiting any extension to recovery plan end dates. We will continue to view shareholder distributions as being inconsistent with the scheme receiving lower contributions, and we expect any deferred DRCs to be repaid – ideally before any shareholder distributions recommence.
- Where employers continue to request liquidity support from the pension scheme through DRC deferrals and/or lower ongoing DRCs as part of a revised recovery plan, we expect trustees to obtain suitable mitigations (see the AFS 2021).
Where trustees place reliance on contingent assets or asset-backed contribution (ABC) arrangements for scheme funding purposes, they should consider the impact of current market conditions on the value of this support, and whether it is still sufficient to cover any additional risk taken. For ABCs, trustees should also consider whether the structure and length of the income stream relative to the scheme’s maturity and inflation linkage remain appropriate.
Shareholder distributions and other forms of covenant leakage
Following a hiatus during the pandemic, we have seen an increase in employers returning cash to shareholders through recommencing dividends, paying ‘special’ dividends and share buybacks. Trustees should be alert to this and consider whether their scheme is being treated fairly compared to other stakeholders.
Our expectations on fair treatment remain consistent with those set out in our 2019 AFS – the key principles of which are as follows.
- Where dividends and other shareholder distributions exceed DRCs, we expect a strong funding target and recovery plans to be relatively short. For reference, at the last valuation for this cohort of schemes (T14), the average recovery plan length was five years.
- If the employer is tending to weak or weak, we expect DRCs to be larger than shareholder distributions unless the recovery plan is short and the funding target is strong.
- If the employer is weak and unable to support the scheme, we expect the payment of shareholder distributions to have ceased.
These represent our minimum expectations. Where appropriate, we would expect trustees to seek funding support above and beyond these expectations, based on the scheme maturity and their assessment of the level of value leakage and covenant reliability.
We also expect trustees to remain vigilant of other forms of covenant leakage, including cash pooling arrangements, group trading arrangements and management fees, which could reduce the ability of the employer to support the scheme.
To protect the scheme from future covenant leakage, trustees may wish to build into valuation discussions further protections, such as a dividend sharing mechanism or negative pledges.
Corporate transactions
In our AFS 2021, our expectation was that trustees should be prepared to act quickly in the event of corporate activity. This continues to be the case, with levels of corporate activity remaining high (such as mergers and acquisitions, refinancing and other capital restructurings, internal reorganisations and business rationalisations).
It is important that trustees take a rigorous approach to assessing the impact of any corporate transaction and have a suitable record of the considerations made in respect of the scheme. Trustees should also refamilarise themselves with our clearance guidance, which has been updated following the Pension Schemes Act 2021.
As in last year’s AFS, trustees should consider corporate events independently from the valuation and seek mitigation for any detriment caused, before separately considering the scheme’s valuation.
Actuarial and investment considerations
Interest rates
Since the start of the year, long-term interest rates have risen and gilt yields continue to be volatile. The impact on scheme funding will vary depending on scheme investment and funding strategies, and the level of hedging in place. There could be collateral calls for schemes with substantial levels of geared hedging, and liquidity issues for investments remain as important as ever. (Our views on these can be found in the AFS 2021.)
Inflation
Current inflation rates
The impact of recent inflation will be scheme-specific and depend on how the scheme benefits and assets are linked to inflation. Careful consideration will be needed over how to build recent and short-term inflation rates into the valuation calculations to ensure benefit increases are being modelled correctly.
Trustees will need to discuss any salary increase assumptions with employers to ensure they also remain appropriate and realistic, given the current conditions.
As current inflation may well be exceeding caps applying to benefit increases, it will also be important for trustees to understand how any inflation hedging they have put in place works in the context of the current environment, and any caps and collars that may apply to benefits.
Long-term inflation expectations
As noted last year, the UK Statistics Authority plans to align the Retail Prices Index with the Consumer Prices Index including owner-occupier housing costs, from 2030. The High Court has granted permission for a judicial review to be heard on this decision in summer 2022. Meanwhile, trustees should choose carefully their assumptions both pre- and post-2030 to reflect the current understanding of the position.
Long-term inflation expectations have risen recently, and all other things being equal, building this expectation into funding bases is likely to increase liabilities for many schemes. Some trustees adjust market-implied inflation measures (such as allowing for inflation risk premiums) and we expect these to be consistent with the scheme’s exposure to inflation within their investment strategy. It is also important to consider how current and potential future interest rates and inflation changes will impact on any LTFT, or end game strategy for schemes.
Mortality
We recognise there are still differing views on the impact from the COVID-19 pandemic on mortality for pension schemes. The immediate impact from actual mortality experience over the period to a scheme’s valuation date will be accounted for in the valuation data, but there remain divergent opinions among market participants on the impact of COVID-19 on the course of future longevity improvements, which are hugely uncertain.
When using the latest base mortality tables and projections available, suitably adjusted for scheme specific factors where appropriate, consideration will be needed on the weighting given to recent data. The Continuous Mortality Investigation model enables schemes to choose the weighting applied to the data for 2020 and 2021, although their core model disregards the data for both years.
Although there is more data now compared to last year, it needs to be interpreted with care. We remain of the opinion that the long-term impacts from COVID-19 will take more time to become apparent. But where trustees feel that changes to their mortality assumptions at this stage are appropriate and justifiable, we expect any reduction in liabilities due to such changes to be no more than 2%, unless accompanied by strong supporting evidence.
Managing risks
Long-term funding targets
The Pension Schemes Act 2021, once implemented, will make it a legal requirement for schemes to have a specific long-term strategy designed to deliver an agreed long-term objective. Trustees should consider taking steps now, if they have not done so already, to incorporate this approach into their thinking by adopting a LTFT, agreeing it with the employer, and setting their journey plan accordingly. For more information, see our AFS 2021.
Longer-term reliance on covenant
When setting their journey plan to the LTFT, trustees should consider the extent of their reliance on the employer covenant over time. It may be many years before the LTFT is reached, and there may then be a significant period before the scheme ultimately winds up. Trustees should therefore engage proactively with employer management to understand the short and longer-term risks that could result in changes in covenant, which could affect the scheme’s journey plan to (and beyond) its LTFT.
These could be employer-specific risks (such as over-reliance on a single, fixed-term contract), broader sector risks (eg changes in consumer demand) or other longer-term risks (such as climate change impacts). An understanding of these longer-term risks should inform the development of appropriate journey plans (for example, whether accelerated de-risking is appropriate), and should be factored into the scheme’s monitoring and contingency plans. Where appropriate, they could also consider requesting downside protection from the employer to help manage these risks in the future.
Monitoring and contingency planning
It remains good integrated risk management practice for trustees to identify the key covenant (and other) risks to monitor, and to consider these against appropriate funding, investment and covenant metrics. When threshold limits for metrics are breached, trustees should have contingency plans in place setting out specific actions for the employer and/or trustees to take, which should enable appropriate and swift decision-making.
Given scheme funding positions and the employer covenant can change materially over a short period of time, trustees should regularly monitor actual funding positions against the main asset and liability risks and the employer’s performance against forecasts and other thresholds. They should also consider short-term liquidity needs in the pension scheme and how these may be affected by margin calls and the need to meet short-term member benefit payments.
Where trustees are concerned about longer-term covenant risks, they should consider alternative funding and investment strategies that place less reliance on the employer in the long term.
Where funding positions are behind target, trustees and employers need to consider how far they have strayed from their expected funding position and their longer-term target, and develop strategies to put them back on course.
Schemes in surplus
As many schemes become better funded and aim towards their LTFT or other end-game strategies, regular monitoring and contingency plans remain as important as ever to enable schemes to progress towards their goals.
Where schemes have recently achieved full funding (on their TPs basis), or are expected to do so soon, trustees should consider how their liquidity needs will change in the absence of employer contributions and organise their investments accordingly. They should also remain focused on their LTFT and their journey towards it. If the journey plan remains appropriate, they should still remain focused on managing their risks through suitable contingency planning. Such plans may include contingent funding contributions linked to suitable funding and risk triggers. Similar plans should also help to address concerns from employers about trapped surplus.
Key risks and our expectations
In recent years, we have set out our expectations in tables for the key risks trustees and employers should focus on, and actions to take, depending on their specific characteristics. We recognise that some broad segmentation according to the key drivers – funding strength, covenant and scheme maturity – should assist trustees in matching their specific scheme circumstances with our guidance in order to develop funding strategies within an IRM framework.
The tables this year are the same as we published last year, with the exception that the reference to the length of the recovery plan has been updated to six years. This is to reflect that recovery plan lengths have decreased over recent years (the average is now less than six years across all valuation tranches).
These tables are not intended to be exhaustive for each category and the recommendations in the tables are thematic. We haven’t set explicit expectations, and the recommendations need to be considered in the context of the other influences covered elsewhere in this statement. Accordingly, the tables are not a substitute for reading this statement or taking independent professional advice.
What you can expect from us
Where sponsoring employers are in distress
The current and emerging macro-economic environment may challenge employers and the pensions industry. Trustees are the first line of defence for savers and their pension schemes, and it is vital that they remain alert, prepare, plan and are ready to act as needed.
We will be engaging with schemes if we have concerns over corporate distress, to ensure they are following our guidance.
When regulating Tranche 17 valuations
Our Supervision teams will risk assess valuation submissions we receive in a proportionate way. These risk assessments look at the overall risk profile of a scheme relative to the ability of the employer to support it. It is therefore important that trustees and employers are fully aware of our expectations in this statement and in our wider guidance. Trustees and employers should be fully prepared to justify and explain their approach with supporting evidence.
Our powers
Our suite of powers includes the scheme funding power to direct how a scheme’s TPs should be calculated and how (including over what period) its deficit should be funded. We can use this power when there has been a failure to agree or when the valuation assumptions or recovery plans do not appear good enough to meet the standards required by law. For more information, see our DB funding code, governance sections in the investment guidance and covenant guidance.
We can often achieve appropriate outcomes without using this power. However, we may investigate where we believe trustees and/or employers have not acted in line with our expectations set out here, and in our relevant policy statements, guidance and codes of practice.
From forthcoming (valuation-related) publications
DB funding code
We will regulate all T17 valuations according to the requirements of the existing legislation and guidance currently in force. The current funding regime (as set out in Part 3 of the Pensions Act 2004 and current DB funding code and guidance) applies until the new legislation (Pension Schemes Act 2021 and associated regulations) and the revised DB code come into force. We will be reviewing all guidance and example case studies to align with the new DB funding code.
Our second consultation on the draft code is expected to be launched later in 2022, allowing enough time to learn from DWP’s consultation on the draft regulations. We will ensure stakeholders have an opportunity to engage with and input into our proposals as they are developing. You can read about this on the TPR blog.
Updated guidance for covenant assessments
As part of our second consultation on the draft DB funding code, we plan to set out our proposed changes to our August 2015 guidance on Assessing and Monitoring the Employer Covenant and other related guidance. We intend to provide more detail on how to treat guarantees for scheme funding purposes and more information regarding environmental, social and governance and how this can be factored into the covenant. We will also outline various examples to support trustees in understanding how to apply any updated guidance.
Key risks and our expectations
In each of the following tables, we have identified the key risks we expect trustees to focus on, and features of the funding plans we expect them to develop, depending on their
scheme and employer characteristics. Our feedback from trustees and advisers is that this approach has been helpful. Our guidance from earlier years on the key long-term risks
remains relevant for T17 valuations and is reiterated in the tables which can be accessed via the links above. We remind trustees that these tables are not intended to be exhaustive for each category, nor are they a substitute for reading the AFS or taking independent professional advice.
Trustees should first decide how, if at all, their covenant has changed because of COVID-19 and Brexit, where broadly they are in the maturity spectrum, and how good their funding position is relative to their long-term funding target given the period over which they are aiming to achieve it. This should enable them to find the table closest to their situation, our expectations of the risks they need to focus on, and the actions we expect. They should then set about preparing their recovery plans to balance affordability with contributions linked to well-defined triggers, contingency plans and other protections for member security, as outlined earlier in this guidance.
Find your group
The table below should assist trustees in matching their specific scheme circumstances with our expectations.
Select the link of your group below to be taken to your specific group table.
| Employer strength | Strong/tending to strong employer | Weaker employer with limited affordability | Weak employer unable to provide support | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Funding level |
Funding level strong |
Funding level on track to meet LTFT |
Stressed scheme with limited or no ability to use flexibilities in funding regime | |||||||||
|
TPs strong |
TPs weak |
TPs strong |
TPs weak and/or |
|||||||||
|
RP shorter than six years |
RP longer than six years |
DRCs reducing deficit at affordable price |
RP longer than six years |
|||||||||
| Maturity | Immature | Mature | Immature | Mature | Immature | Mature | Immature | Mature | Immature | Mature | ||
| Group | ||||||||||||
A1 table
| Group | A1 |
|---|---|
| Characteristics |
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| Key risks |
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| What we expect from trustees and employers | |
| Covenant |
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| Investment |
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| Funding |
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A2 table
| Group | A2 |
|---|---|
| Characteristics |
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| Key risks |
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| What we expect from trustees and employers | |
| Covenant |
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| Investment |
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| Funding |
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B1 table
| Group | B1 |
|---|---|
| Characteristics |
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| Key risks |
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| What we expect from trustees and employers | |
| Covenant |
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| Investment |
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| Funding |
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B2 table
| Group | B2 |
|---|---|
| Characteristics |
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| Key risks |
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| What we expect from trustees and employers | |
| Covenant |
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| Investment |
|
| Funding |
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C1 table
| Group | C1 |
|---|---|
| Characteristics |
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| Key risks |
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| What we expect from trustees and employers | |
| Covenant |
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| Investment |
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| Funding |
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C2 table
| Group | C2 |
|---|---|
| Characteristics |
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| Key risks |
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| What we expect from trustees and employers | |
| Covenant |
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| Investment |
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| Funding |
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D1 table
| Group | D1 |
|---|---|
| Characteristics |
|
| Key risks |
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| What we expect from trustees and employers | |
| Covenant |
|
| Investment |
If adequate formal group support has been conferred, treat as follows:
Otherwise, if there is a reasonable likelihood of the employer continuing as a going concern, treat as follows:
|
| Funding |
If adequate formal group support, treat as follows:
Otherwise, treat as follows:
|
D2 table
| Group | D2 |
|---|---|
| Characteristics |
|
| Key risks |
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| What we expect from trustees and employers | |
| Covenant |
|
| Investment |
If adequate formal group support has been conferred, treat as follows:
Otherwise, if there is a reasonable likelihood of the employer continuing as a going concern, treat as follows:
|
| Funding |
If adequate formal group support, treat as follows:
Otherwise, treat as follows:
|
E1 table
| Group | E1 |
|---|---|
| Characteristics |
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| Key risks |
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| What we expect from trustees and employers | |
| Covenant |
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| Investment |
Where there is a reasonable likelihood of the employer continuing as a going concern:
Where there is a reasonable likelihood of the employer not continuing as a going concern:
|
| Funding |
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E2 table
| Group | E2 |
|---|---|
| Characteristics |
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| Key risks |
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| What we expect from trustees and employers | |
| Covenant |
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| Investment |
If there is a reasonable likelihood of the employer continuing as a going concern:
Where there are concerns over the financial position of the employer:
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| Funding |
|