Do you feel you are getting value for money from your benefits suppliers and consultants? More specifically, from your pension suppliers?
If your experiences are anything like those of delegates at the National Association of Pension Funds’ (NAPF) Investment Conference in Edinburgh earlier this month, the answer is most likely to be no.
When polled ahead of a panel debate on the topic, nearly three-quarters of delegates said they did not believe pension funds were getting value for money from consultants, providers and active asset managers.
In the debate that followed, it was argued that too high a percentage of the cost of running a pension scheme comprised investment fees and stock selection, rather than crucial issues such as strategy.
This followed the government’s announcement a week earlier that it has tabled an amendment to the Pensions Bill to require pension providers to disclose all transaction costs in workplace defined contribution (DC) pension schemes. The move is intended to enable employers to see exactly how much they are paying for asset management services to get the best value for pension scheme members, who will also reap the benefits of increased transparency.
Greater transparency around costs is crucial to boosting pensions value for both employers and scheme members. The way things currently stand, there is so little (if any) information available around what costs include, that mandatory transparency could go a long way to creating greater value and boosting retirement outcomes for scheme members.
On 27 March, the government announced its intentions for tough new rules to ensure that all hidden transaction costs in pension schemes are published, and it will consider whether these should be included in the new 0.75% charging cap for workplace pensions.
But how long it will take for such a significant shift to happen remains to be seen.