A group of investor organisations, advisers and academics has called on MPs to open an inquiry into the charges levied on pensions to give savers a better deal.
In an open letter to Pensions Select Committee chair Frank Field, the Transparency Task Force (TTF) said that it does not believe the current probe into defined benefit pension scheme charges goes far enough if it wants to improve fee transparency.
“What is needed is an inquiry that takes a holistic view on all costs adversely impacting pension schemes,” the TTF’s founder and chair, Andy Agathangelou, said.
The ‘collaborative campaigning community’, which seeks better outcomes for pension savers, wants to see the review extended to include defined contribution schemes. It is also pushing for greater transparency around where and how a fund’s money is being invested.
The TTF believes that greater disclosure could improve performance in the industry by creating a more competitive and efficient market. This could see savers get value for money and potentially retire with a larger pension pot.
The Work and Pensions Committee is not the only body looking into this issue. The letter comes months after the Financial Conduct Authority (FCA) proposed steps to boost transparency on the fees asset managers and consultants charge pension savers.
Agathangelou commended the FCA’s Asset Management Market Study for “shining a light” on the problems within the industry. However, he believes it needs to go further as this is just “one link in the ‘value’ chain”.
He told portfolio institutional to think of a someone’s pension savings as a bucket into which they are putting in water, but there are so many holes that the water, or money, is escaping. “The asset management industry is just one of the holes in that bucket of water,” he added. “The fact is that there are six, seven, eight, nine, 10 other holes in that are not being looked at by the asset management market study. That is why we are asking for a more comprehensive, if you like holistic approach, to cost disclosure throughout the pension value chain.”
He called for hidden costs, such as those for administration, platform, distribution, invoicing and communication, to be considered.
“The consumer does not care if a pound is being wasted through asset management or through administration, it is being still wasted. “What we are trying to do is make it possible for that pound not to be wasted at all. This is what the whole thing is about.”
Agathangelou’s comments echo those from another industry figure reported by portfolio institutional this week, urging the FCA to look at all costs in the asset management industry.
