Greater transparency could help UK pension funds reduce total costs and charges from 1.69% of assets to 0.82% according to the Association of Member Nominated Trustees (AMNT). For a fund with £100 million in assets, the saving would be £800,000 a year, it said.
Speaking at a transparency conference in London, AMNT co-chair, David Weeks, told delegates: “Transparency is not a race to the bottom as some opponents try to pretend. It is about creating an environment for better outcomes. It is about value for money for members. It is what trustees do. This analysis makes it clear that we must work as an industry to achieve much higher levels of transparency in financial services because, people must be encouraged to save more in their working lives.”
Weeks added: “If, across the industry, we were to apply the simple mantra of ‘what gets measured, gets managed’, we could achieve significant savings for pension schemes, with member outcomes benefiting directly – as this analysis shows, the average pension fund could stand to benefit from savings of around £800,000 per year, which could have positive benefits for reduction of risk and achieving target returns.” The AMNT also cited the work of a forensic account, Vicky Bell, at the railways industry pension fund, RPMI Railpen, which found that costs were four times greater than was expected. Bell said funds should have an annual checklist, write to all managers and ask for their transaction costs and audited accounts. She said that in her experience, some managers do not respond, so it is important to be persistent when requesting this information.