Trustee boards should seek independent advice

More than a third of trustee boards do not seek any independent advice on employer covenant issues, according to research from Gazelle Pensions Advisory.

The survey found half of the trustee boards of the UK’s largest pension schemes are concerned for the future about the impact on their employer’s covenant of a takeover. The main worries are from acquisitions by private equity firms and foreign-based businesses. Paul Thornton, managing director of Gazelle Pensions Advisory says: “Trustee boards must pay now pay great attention to the sponsoring employer’s covenant. It is alarming that more than a third of schemes take no independent advice on covenant issues at all. More alarming still is the finding that 8 out of 10 of these self-reliant boards think independent advice also will be ‘unnecessary’ in the future.”