It is unfortunate that during these days of over-regulation and excessive compliance a Scheme Actuary (acting on behalf of the Trustees) has to initiate funding discussions with the employer against the background of two Regulator inspired facts:
- We are going to ask you for more money than we think we need to pay pensions.
- The less you can afford to pay the more we will ask you to pay.
We are used to working with clients towards practical and realistic assessments of the employer covenant. This is closely tied in with the scheme's funding and is now an important part of the actuarial valuation process. We take a pragmatic approach - if the scheme is reasonably well funded there is less need for a stringent employer covenant assessment - if the trustee body has an accounting background and familiarity with the employer then there may be less need for a stringent independent employer assessment of covenant. If the funding level is weak and the trustees do not have the internal expertise for a full assessment then we have contacts with several accounting firms and can coordinate employer covenant assessment, ensuring that these are prepared on a time and cost effective basis.