Issue - meetings

BOND REVIEW AND INTERACTION WITH COVENANT

Meeting: 23/06/2021 - Local Pension Board (Item 9)

9 BOND REVIEW AND INTERACTION WITH COVENANT pdf icon PDF 65 KB

Additional documents:

Minutes:

Yvonne Murphy, Head of Pensions Administration, introduced a report that aimed to provide Board members with information and reassurance on Bond Review and the interaction with covenant. A number of employers had bonds in place which aimed to cover part or all of the value of their termination debt if they exited the Fund and were unable to pay the full debt.

 

The report set out the updated risk adjusted approach that had been adopted to review employer bonds with an assessment date of 31 December 2020. This approach took the covenant of an employer into consideration in order to achieve a balance between reduced risk on the Fund and the burden of cost for an employer. This included how they would be monitored going forwards to manage the risk of unfunded debts arising in the future. The report also set out the measures that had been put in place by the Fund to reduce the overall risk associated with an employer failing to meet their financial obligations to the Fund.

 

Resolved – That the completion of the bond review allowing for the covenant-based risk adjusted approach and the ongoing engagement with employers to seek to increase the bond cover be noted.