The TPR Funding Code has changed the structural relationship between funding basis and covenant. Under the new regime, the funding basis is meant to reflect the sponsor’s ability to support the scheme, with the long-term funding target setting the trajectory the scheme is on. That is a substantive sponsor-side commitment, and the funding basis the trustees agree to is, structurally, asking the sponsor to commit to a specific quantitative position.
Where qualitative covenant assessment runs out
Most schemes work this through qualitatively, with the covenant adviser’s qualitative position translating into the funding basis discussion. That works where the qualitative position is uncontested. Where it isn’t — where the sponsor disputes the funding basis being proposed, or where the long-term target appears to be asking for more than the qualitative covenant position justifies — the qualitative discussion is insufficient. The substantive question becomes quantitative: what is the funding basis actually asking of the sponsor, and is that consistent with the sponsor’s economic capacity?
The reconciliation diagnostic
The firm’s methodology translates the disclosed funding basis into the implicit financial commitment that basis encodes, and benchmarks that commitment against the sponsor’s actual financial capacity. The reconciliation is multi-route: each disclosed funding-basis route (technical provisions on prudent assumptions, the long-term funding target on different assumptions, the buy-out reference if relevant) is translated into a sponsor-economic commitment and reconciled against capacity.
The output is structured so the sponsor and the trustee can see — and discuss — where the formal covenant position diverges from the economic one. It is methodologically complementary to qualitative covenant practice, not a replacement for it: qualitative assessment captures things the quantitative reconciliation cannot, and the reconciliation surfaces things qualitative work alone is unlikely to surface.
Where this matters under the new regime
Three contexts where the diagnostic adds substantive value. First, Triennial Valuations under the new funding regime, where the basis change from the prior regime makes the funding-position discussion materially more contested. Second, statement-of-funding-principles drafting and Long-Term Objective discussion, where the trajectory the scheme is on requires quantitative covenant grounding rather than purely qualitative. Third, corporate transactions involving the scheme, where the implicit covenant commitment of the funding basis materially affects the corporate position.
In each, the sponsor benefits from a quantitative reference point that is structurally independent of the trustee adviser network. The trustee adviser bench is, structurally, larger than the sponsor’s — the scheme actuary, the covenant adviser, and the investment consultant all advise trustees. Sponsors often do not have an equivalent independent quantitative voice on the same questions.
Where Congruent is engaged
The firm’s Sponsor Covenant Analysis Solution is in active development as a productised offering. The methodology is mature; the productisation work concerns the standardised engagement scope, the artefact stack, and the documentation patterns that allow it to run as a productised Solution alongside the firm’s four live offerings.
In the meantime, bespoke engagement is available for sponsors with substantive funding-code matters in the pipeline. The bespoke route applies the same Fair Value Framework methodology that will sit behind the productised Solution; the engagement shape is calibrated to the specific matter rather than to a standardised scope. For sponsors anticipating funding-code matters where qualitative covenant assessment alone is unlikely to settle the question, the bespoke route is available now without waiting for the productised form.
Three questions for sponsors
The first question is whether the funding basis being proposed by the trustees has been translated, in sponsor-economic terms, into the commitment the basis is asking of the sponsor. The disclosed liabilities figure is one number; the implicit sponsor commitment over the funding trajectory is a different one. If the sponsor has only seen the disclosed liabilities figure, the sponsor doesn’t yet have what it needs.
The second is whether the implicit commitment, on the firm’s reconciliation, is consistent with the sponsor’s economic capacity to support it over the trajectory. The qualitative covenant assessment will state a position on capacity; the quantitative reconciliation tests whether the funding basis is, in fact, consistent with that position.
The third is whether the trustee position has substantive grounds to be challenged on a quantitative basis. If the qualitative position has been taken on grounds that don’t survive quantitative scrutiny, the sponsor has a substantive case to bring back to the funding discussion. If the qualitative position is consistent with the quantitative reconciliation, the sponsor has analytical grounds to accept the trustee position.
Last updated May 2026.