Comment | PLSA
New standards could mean better value for savers
Joe Dabrowski
Joe Dabrowski is head of DB, LGPS and standards at the PLSA
Cost transparency from asset managers and service providers is one of the key ways pension schemes can ensure that they are achieving value for money with the investments they make for savers retire- ments. If we are to ensure that schemes are well run and continue to provide value for money, mak- ing sure that people have a clear understanding of their costs to help them make informed judgments on investment services is a vital competent to the overall health of a pension scheme. It’s for that rea- son that we within the Cost Transparency Initiative are pleased to see our new industry standards for reporting investment costs and charges entering the marketplace. While pension schemes work extremely hard to obtain value for money, there hasn’t been an agreed way of reporting costs across the industry. To that end the new standards we are making available to the sector will help pension scheme trustees understand the costs of their investment services, and provide a standardised and comparable means for asset managers to report costs to clients. The standards – which comprise of templates and guidance – cover most of the assets that pension schemes invest in. Following their launch, we are expecting them to be taken up by schemes, con- sultants and asset managers representing around £2trn of savers’ funds. It’s our expectation that trustees start talking to their managers about reporting their costs against the standards. We’re keen to see early adoption and we’d expect asset managers to be in a position – at the very latest – to report against December 2019 and April 2020 year-ends using the Cost Transparency Initiative’s tools.
When we launched in November 2018, the Cost Transparency Initiative was tasked by the Institutional Disclosure Working Group to implement, promote and encourage the use of the cost transparency templates across the pensions and investment industries. A challenge we gladly took on. The Pensions and Lifetime Savings Association, the Investment Association and the Local Govern- ment Pension Scheme Advisory Board are now able to deliver and achieve the Cost Transparency Ini- tiative board’s goals and we are delighted with the progress it has made so far. These standards will give investors the information to compare charges, give them a clear expectation of the disclosure they can expect, and ultimately deliver better value for money. A lot of hard work has been going on in the background. For example, the Cost Transparency Initiative ran a pilot to test materials. Concluding in March 2019, this pilot phase provided substantial technical feedback which the Cost Transparency Initiative’s board has incorporated into its designs. With the standards launched, the real work starts now. The Cost Transparency Initiative intends for the standards to be adopted by all schemes and firms. For that to happen, we have to continue to work with asset managers and pensions schemes to not only show them why they should adopt the stand- ards for their own benefit, but also why this work will help protect and enhance the investments of millions of savers throughout the UK and help them achieve a better retirement.
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14 | portfolio institutional | May–June 2019 | issue 84
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