Transaction Costs Disclosure: Improving Transparency in Workplace Pensions – KAS BANK Response to Call for Evidence

The Financial Conduct Authority and the Department of Work and Pensions in the UK have joined forces to drive forward an agenda of transparency for UK pension funds. On 1st May 2015 KAS BANK UK Branch submitted a response to their Call for Evidence on their paper “Transaction Costs Disclosure: Improving Transparency in Workplace Pensions”.

Read our full Response here.

Our response emphasises KAS BANK’s in-depth knowledge to provide transparency solutions to UK pension funds.

We believe transparent collection of costs is important for UK pension schemes as costs span much further than purely the reported AMC, and these costs are generally absorbed by the return of the fund. In the current scenario where DB scheme funding levels are under pressure due to a low yield environment, the impact of costs on the sustainability of these pension funds is considerable.

We believe that if you are able to measure costs more reliably and consistently, you can input this information to establish true performance, in order to make more educated decisions and empower trustee boards to be in control. Ultimately cost collection should not pose a challenge to enforce through regulation as the data belongs to the underlying pension fund.

However, we recognise that it may be technically challenging for asset managers to provide a look through into funds on a line by line basis to estimate transaction costs at a consolidated level. The Dutch model shows that the ultimate ownership of data by the pension fund means that it is collectable.