We use cookies to support features like login and allow trusted media partners to analyse aggregated site usage.
To dismiss this message and allow cookies to be used, please click "Continue".



Twitter board

Follow us
  • Friday View: Piecing together the pooling puzzle- DGF Roundtable - Royal Mail names pensions boss -LGPS Central sel… https://t.co/DPfZ3WUv6K2 days ago
  • portfolio institutional is launching a new series on LGPS pooling, tracking changes to investment strategies and up… https://t.co/Ld04PZ2TNK4 days ago
  • Friday View: ESG: What lies beneath? - Industry backs DWP's ESG push - LGPS Central CEO to step down - Railpen hire… https://t.co/S3knBieob09 days ago
  • Out now- The portfolio institutional September issue feat our cover on ESG: What lies beneath? -Interview: Railpe… https://t.co/x9EYxDVXEl13 days ago
  • Friday View: LGPS pool appoints CIO - Jack Dromey on cost reporting - TPR hires former FCA director - NEST issues p… https://t.co/aNVGQqK35Z16 days ago
  • RT @AonRetirementUK: How prepared is your portfolio? Read a write-up of the discussions at our recent event with @portfolio_inst, along wit…18 days ago
  • "Shadow pensions minister Jack Dromey comments on the need to set compulsory standards for cost reporting." Read m… https://t.co/vH1gGZBm1q18 days ago
  • "Border to Coast, a recently launched £46bn public sector pension pool, has appointed Daniel Booth as its chief inv… https://t.co/AlIwikhgli19 days ago
  • Friday View: Spike in shareholder rebellions - Investors ditch GBP funds - Access launches first  pooled fund - GAM… https://t.co/aFzvBWgsmp23 days ago
  • Join us and HarbourVest Partners for breakfast to discover how access to private companies can provide diversificat… https://t.co/JaRlWiziJl23 days ago
  • "Ian Scott tells Mark Dunne about being back on the buy side, hedge funds, self-sufficiency, the trouble with infra… https://t.co/G0UUF9ldSx24 days ago
  • "Aon has developed an ESG rating system for buy-rated investment strategies which is designed to assess whether and… https://t.co/mstoAc3vr325 days ago
  • "With hedge fund performance improving and pension scheme investment increasing, has more institutional backing res… https://t.co/JVcIEXXKwr30 days ago
  • "The infrastructure repair bill is huge and more and more pension funds are willing to step in and plug the funding… https://t.co/zXy2lbpj6K31 days ago
  • "For investors looking to own sustainable businesses, engagement is the new divestment." Read more here:… https://t.co/YiA28qc6BI32 days ago
  • "Thanks to climate change, pension scheme portfolios are in danger of overheating. So what are trustees doing to pr… https://t.co/8gND4lC1OZ33 days ago
  • RT @eVestment: With research claiming that companies with high #ESG standards make better #investments, are sustainable strategies on the v…37 days ago
  • "The revolution in how investors are assessing companies is gaining momentum. No longer considered niche, responsib… https://t.co/uFCHnMlOux37 days ago
  • Friday View: Beyond bonds: The future of LDI - Responsible investing: Just reward - Just buys DB adviser - Ex Railp… https://t.co/1suOFFSprA37 days ago
  • "An increasing number of pension schemes are adopting a more efficient way of investing." Read more in our in-dept… https://t.co/F6Y0e9DB5E37 days ago


Comment: Why Labour will introduce mandatory cost reporting for pension funds

Comment: Why Labour will introduce mandatory cost reporting for pension funds

Jack Dromey
Monday 3rd September 2018

Shadow pensions minister Jack Dromey comments on the need to set compulsory standards for cost reporting.

When workers save towards a pension, they rightly expect that they will receive the maximum returns possible. Unfortunately, due to the opaque nature of investment costs and charges, this is not possible. There is no obligation for fund managers to report what these costs are and this means that neither pension scheme members, nor trustees can accurately say how it is being spent.

On the 3rd August, the Work and Pensions Select Committee (WPSC) launched an inquiry to examine whether the pensions industry provides “sufficient transparency” of charges, strategy and performance to savers. More than five years ago, the Office of Fair Trading (OFT) launched a market study into the market for defined contribution (DC) workplace pensions with the aim of examining whether, in the light of auto-enrolment, competition is capable of driving value for money and good outcomes for scheme members.

More than five years on, both the Government and Parliament continue to struggle with this key problem and nothing seems to have been learned from the OFT’s ground breaking report. Our citizens who are saving at the workplace have been let down time and time again.

Transparency around costs would have a significant impact on the ability of funds to pay out retirement savings. A study by the Netherlands Authority for Financial Markets found that a reduction in costs of 0.25% would result in a 7.5% increase in collective pension assets over 40 years.

Yet the government has acted like a rabbit in the headlights when trying to deal with pension fund cost collection and reporting. In the UK, DC funds must report costs to scheme members but the collection of these costs uses a methodology which has failed and defined benefit (DB) pension funds, where the vast bulk of investment assets are held, have no requirement to collect and publish cost data.

Clearly if there is no compulsion to collect through a government-supported template and report cost data, it will not be done.

Labour will make pension fund cost transparency a key priority in our first 100 days of government by:

  • Ensuring pension funds collect, analyse and report on all administration, investment management and transaction costs – requiring all investment agents to present all costs to their clients on request
  • Creating an efficiency target for all pension funds to reach, ensure regulators monitor pension fund performance, including a requirement to consider in-house investment management

Unlike this Tory government, Labour has studied the work of pension funds and social partners in the Netherlands where the cost reporting framework has been a recommended practice by the Dutch trade body, PensioenFederatie, for around seven years. But since 2017, pension schemes have been legally required to report on their costs to the regulator DeNederlandscheBank (DNB).

The framework has enabled pension funds to evaluate and break down the total costs, including transaction costs, associated with running their scheme. Labour is determined to ensure that every worker receives a safe and secure pension to live on after they finish work. And this starts with transparent reporting of costs and charges so that workers know exactly how every penny of their pension is being spent and that they are getting best possible value for money.

Report by Netherlands Authority for Financial Markets: https://www.afm.nl/nl-nl/nieuws/2011/april/kosten-pensioenfondsen



Leave your comment

View our comments policy

Please login or register with us to leave a comment. It's completely free!