Cost transparency is an important social responsibility tool for pension schemes, given the longer-term impact of costs on pensions savings and returns.
DEFINING YOUR OBJECTIVE FROM THE BEGINNING
You may want stronger oversight of your costs, for example. A cost transparency exercise provides tangible, transparent information on costs – and if it’s your first time considering such an exercise, the initial data-set is a good starting point. By undertaking the exercise every year, you can track your progress on how your pension costs are being managed.
Seeking to reduce your costs could be another objective. The greater implementation of cost transparency by UK pension schemes is helping drive costs lower. For example, we’ve seen a gradual fall in management, performance and transition costs since 2016, which has had an important impact on pension saving and returns. Having greater insight of your costs will help in your discussions with asset managers.
Last update: 23 November 2022
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