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The UK could legislate to enforce new cost transparency codes if investment managers and service providers do not comply voluntarily, the country’s pensions minister has warned.

The Cost Transparency Initiative (CTI) – set up by asset owners and managers last year – today published its first institutional asset management fee disclosure templates for a range of asset classes.

The templates are designed to allow pension schemes to understand all levels of costs involved in running investment portfolios, challenge managers on how money is spent, and compare charges across asset managers and other providers using a consistent format.

Guy Opperman, minister for pensions and financial inclusion, said: “High fees can eat into savers’ pension pots and add to employers’ costs. This initiative will help pension schemes take a holistic view of costs and charges as they strive to ensure their members get value for money.

“I’d strongly encourage trustees and investment managers to embrace the CTI and adopt the new templates. The government will legislate robustly to make this happen if the industry does not resolve this on a voluntary basis at speed.”

Guy Opperman, UK minister for pensions and financial inclusion

Source: PLSA

Guy Opperman addresses an industry conference in October 2018

ClearGlass, a cost analysis firm set up by Chris Sier, one of the architects of the CTI templates, reported that five of 122 managers it had engaged with had refused to use the models.

Sier said he hoped that “the need for primary enforcement legislation is now a thing of the past”.

“The experience of ClearGlass over the past five months since soft-launch in January has been one of support from asset owners and asset managers alike,” he said.

“Fortunately, the FCA [Financial Conduct Authority] would like to hear about any such managers and we ensure that all our clients know that they are at liberty to report managers to the FCA for non-compliance, and that the FCA will listen.”

Chris Sier

“The experience of ClearGlass over the past five months has been one of support from asset owners and asset managers alike”

Chris Sier, chairman, ClearGlass

The CTI said it expected trustees to “engage with their investment management suppliers immediately”, and for managers to be able to report costs for December 2019 and April 2020 year-ends using the templates.

The models are the result of more than two years of work by the UK’s Local Government Pension Scheme (LGPS), pension scheme trade body the Pensions and Lifetime Savings Association (PLSA), and asset management lobby group the Investment Association (IA). Members of all three collaborated through the Institutional Disclosure Working Group (IDWG), overseen by Sier and UK financial regulators.

‘Vast majority’ of assets covered

Mel Duffield, chair of the CTI and pensions strategy executive at the Universities Superannuation Scheme, said: “This is another big step forward for this project and for cost transparency in the pensions industry. Each of the three founding organisations – the PLSA, IA and LGPS Scheme Advisory Board – has shown its commitment to taking forward the excellent work undertaken by Chris Sier and the entire IDWG team, and we are delighted to have reached this stage.

“We will now push for wide-spread adoption of the templates and guidance over the next 12 months and promote the benefits both savers and pension fund trustees’ can experience from their use.

“The board will review the take-up of the templates and guidance after the end of the reporting period in April 2020 and will be working closely with government, regulators, and industry to ensure high adoption levels in the interim.”

The CTI said the templates were able to cover “the vast majority” of asset types. The “main account” template includes references to exchange-traded and over-the-counter derivatives, foreign exchange contracts, debt instruments and physical assets.

There is also a separate private equity template that is also suitable for use with private debt investments, according to the CTI.

The body ran pilots with a small number of pension funds and asset managers to test the templates, which it said “provided substantial technical feedback” that was incorporated into the final templates.

Industry response

The Pensions Regulator:

“As part of our role to protect pension savers, we welcome the CTI’s work to help trustees be clearer on the transparency of costs and charges levied on members. We will be working with trustees to highlight the benefits of these new standards, including how they can help with member engagement activities.

“The standards should be particularly helpful for defined contribution schemes as they have a duty to publish costs and charges information from their annual chair’s statements. The ability to obtain costs and charges in this standardised way will also enable trustees and scheme managers of defined benefit and public service schemes to strike better deals with their providers.”


Jonathan Lipkin, director for policy, strategy and research, the Investment Association:

Jonathan Lipkin, Investment Association

Jonathan Lipkin, Investment Association

“As a founder member of the Cost Transparency Initiative, the Investment Association welcomes today’s launch. Our industry is fully committed to transparency of costs and charges, and we are pleased to see the work of the Institutional Disclosure Working Group come to fruition.

“As the framework rolls out, pension scheme trustees will have a better view of all costs, from both investment managers and other suppliers, and will be able to evaluate their delivery accordingly.”


Pat Sharman, UK managing director, KAS Bank:

Pat Sharman, UK managing director, KAS Bank

Pat Sharman, UK managing director, KAS Bank

“We commend the great work of the CTI through the launch of templates and guidance, that facilitates a standardised way for the UK pension industry to collect cost data… Our research clearly shows the benefits of standardised transparency in the Netherlands, and KAS Bank is committed to ensuring that UK trustees have access to the best possible tools and education on cost transparency.

“With the arrival of new data, we believe that the next step forward is to support schemes with intuitive reporting, that will make sense of the CTI data, really bringing it to life and a better understanding of the costs of running a pension scheme.”

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