The National Association of Pension Funds has reacted to the Financial Conduct Authority and the Department for Work & Pensions’ call for evidence on transaction costs for workplace pensions, released today.
It comes just one month ahead of new obligations for independent governance committees and pensions scheme trustees to report annually on the charges involved in managing pension pots of scheme members – including trading costs.
In an interview with The TRADE, ahead of the publication of the report, Iain Cowell, investment director of the National Association of Pension Funds (NAPF), said pension funds are “not getting consistent data from their providers”.
He explained: “What we are doing at the NAPF is working with a core group of our members to help define what that content structure of reporting looks like.”
Today’s news comes two weeks after the Investment Association published its discussion paper on how asset managers should communicate costs and charges to their clients.
The IA’s director general had told The TRADE that his members are keen for ‘spread capture’ to be the key metric in identifying transaction costs.
However, the NAPF’s investment director, Iain Cowell, said his members would like to see a greater analysis – looking at costs from all angles.
He said: “We are looking at a much wider agenda and considering a much wider cost structure. The bid/offer spread is one area, but unlike the Investment Association, we look at it more holistically for the overall pension scheme.
“We very much support the IA’s approach and they have taken that position because of the nature of their members.”
Cowell said that from the NAPF’s perspective, it is the trustees that have the responsibility to be able to do that analysis of the investment manager and pass on the benefit of that expertise and knowledge to the underlying members.
In a statement announcing the call for evidence, Christopher Woolard, director of strategy and competition at the FCA, said: “Trustees and IGCs of workplace pension schemes need to have clear and transparent information as part of assessing value for money offered by pension schemes.
“We want clarity and consistency across the market and that is why we are asking for views on how costs and charges information should be disclosed.”
• Read the March print edition of The TRADE for an extensive survey of the transaction costs analysis (TCA) third party vendor market.