The International Organisation of Pension Supervisors (IOPS) has updated its survey of charges on members of defined contribution (DC) pension schemes from selected countries around the world.
Croatia, the Czech Republic, Hungary and Macedonia stand out as European countries where the charge ratio on individual retirement accounts has fallen sharply since IOPS’ pioneer study on DC fees in 2008.
Estimating charges for a forty-year period, IOPS finds they have almost halved in Croatian and Macedonian funds over the last six years due to legislative changes and markets maturing.
The fall is even more dramatic in Poland, although the system here is in a period of flux since the State transferred more than half of private pension assets to the first-pillar earlier this year. Likewise, in Hungary asset management fees are reported as falling from 0.8% to 0.2% in 2011, but this followed the effective winding-up of second-pillar schemes the year before.
Both cases are warnings that a global study of DC pension schemes does not lend itself readily to cross-country comparisons.
In the new report, IOPS authors, Liviu Ionescu and Edgar Robles claim that Central and Eastern European countries have quite a complex fee structure that makes it difficult for members to fully compare costs between pension funds.
“In these jurisdictions the sole legal requirement for pension funds to publish all the fees that they can charge to members does not meet the intended purpose,” they write.
“Consumers would benefit from a move towards greater clarity of pension charges, in addition to the cap on fees that is quite common in these jurisdictions.”