Major UK pensions sign up to cost disclosure initiative

Ten of the UK’s biggest pension schemes have written a joint letter publicly announcing their commitment to the Cost Transparency Initiative.

Launched in
November 2018, the Initiative encourages asset managers to report their costs
and charges in a standardised format to help institutional investors access and
assess critical information on costs and decide whether investments represent
value for money. 

The Initiative, which provides a set of templates and tools
to standardise cost data, has seen its framework gather support and interest
from the pension and investment industries in recent months.

The 10 big name pension schemes lending their support
include the Universities Superannuation Scheme, DHL Pensions Investment Fund,
Kingfisher Pension Scheme, National Grid UK Pension Scheme, Nest, RBS Group
Pension Fund, Royal Mail Pension Plan, Smart Pension, Superannuation
Arrangements of the Universities of London (SAUL), and the People’s Pension.

In its joint letter, the schemes – which
have a combined 19 million members and more than £150bn in assets under
management - have set out their intent to use the new standards to push greater
transparency around costs.

“We
represent some of the largest pension schemes in the UK and we believe that
greater cost transparency will help everyone achieve a better income in
retirement,” the letter states. “We support the approach taken by the Cost
Transparency Initiative to create a new industry standard for institutional investment
cost data.”

The pension
schemes said that they would support further development of guidance for asset
managers on how to provide cost information to their clients, and for investors
on how to make best use of this new industry standard.

“We intend
to use the tools and templates as far as is appropriate to the specific
circumstances of our scheme,” they said in the joint statement.

The Cost Transparency Initiative, which carries forward the
work of the previous Institutional Disclosure Working Group (IDWG), said it expects
asset managers to report against December 2019 and April 2020 year-ends using its
new tools and framework.

“I’m delighted that so many pension schemes have engaged and are adopting the Standards already and that ten of the largest DB and DC schemes in the UK have made this public commitment of support,” Mel Duffield, chair of the Cost Transparency Initiative, said.

“We will work across the industry to encourage adoption and will be working with schemes and providers to showcase just how important these Standards can be for them and indeed for the millions of savers who will ultimately see the benefits of greater cost transparency,” Duffield added.

The Cost Transparency Initiative is supported by the Pensions and Lifetime Savings Association (PLSA) and the Local Government Pension Scheme Advisory Board and was recommended as part of the IDWG’s report to the FCA last year.