Learn from the Netherlands and take action on cost reporting, says transparency specialist

Last week at the Transparency Symposium, held in London, the Dutch Pensioenfederatie won the Transparency Trophy for their drive to implement guidelines for reporting pension fund costs. Stewart Bevan, KAS BANK UK’s specialist in cost transparency, says it is now time to learn from the Dutch example and actively move forward with implementing cost disclosure reporting for UK pension funds.

The Transparency Symposium, run by the Transparency Task Force, brought together representatives from across the financial services industry to discuss transparency issues affecting UK pension funds.

“It is encouraging to see the continual gravitation towards the issue of costs disclosure,” says Bevan, “but the time has come for the industry to put thought into action and put practical measures in place to increase transparency in this particular area.”

Throughout the presentations and discussions at the Symposium the message received was that there is a clear feeling of information imbalance between consumers and providers. Stakeholder education on transparency is seen as a stepping stone to combatting this imbalance and delivering better outcomes to the ultimate beneficiaries. However, agreement has not yet been reached on how best to move forward. In his presentation, Daniel Godfrey of Big Issue Invest Fund Management emphasised that clarity and standardisation of reporting should be key.

“We need to learn from the example of the Netherlands and create a reporting solution as good as possible, as fast as possible,” says Bevan. “The aim should be to keep learning and accept that the first iteration of cost reporting will not necessarily be perfect first time round. It should be considered a work in progress, both evolutionary and progressive. This will make implementation more successful in the long term, while ensuring pension schemes start to reap the benefits in the near future.”

Tomas Wijffels and Frits Meerdink from the Pensioenfederatie gave an update on their pro-transparency developments and announced the updated Dutch guide to cost reporting for 2016. The introduction of elements, such as look-through of costs for underlying investment structures being reported within the total cost of the pension fund, shows the evolutionary nature of cost reporting in the Netherlands.

In conclusion, Bevan says: “The recognition of the positive and progressive work achieved by the Pensioenfederatie gives us confidence that it is possible in the UK to provide better transparency to pension funds in the very near future.”

Contact
KAS BANK UK
Emma Craig
T: +44 (0) 207 153 3662
E: emma.craig@kasbank.com