Research revealed an increase of 1 bp in asset management costs in 2013 for pension funds


KAS BANK Newsflash October 31th, 2014

Research conducted by Lane Clark & Peacock (LCP) in collaboration with the Dutch Pension Federation has revealed that pension funds spent more money on asset management costs in 2013 in comparison with 2012. The costs increased with 1 basis point to 0.54% of the pension assets. However, our own research showed that asset management costs of pension funds in 2013 fell by 1 basis point to 0.53% of the pension assets.

Download our NewsFlash Asset management costs of pension funds increased by 1 bp in 2013 as a PDF (opens in a new window).

Results
The research outlined that almost all pension funds report their costs in their annual report. Almost all of them followed the recommendations on cost transparency that the Dutch Pension Federation drafted in 2011.

In 2013, 94% of participating funds give insight into the costs of pension management, 93% in the asset management costs and 74% in transaction costs. The pension management cost was in 2013 on average € 120, - per participant (2012: € 121,-). The asset management costs averaged 0.54% of total assets (2012: 0.53%) and the transaction costs on average 0.09% (2012: 0.10%).

Differences
The differences between the pension funds are considerable. The reported asset management costs vary between 0.04% and 1.14% of the average invested assets. It is notable that large pension funds pay significantly more than smaller pension funds. Whether these costs are higher as a result of higher returns is the question. Returns are reported in a structured and clear manner, there is room here for improvement for pension funds.
Therefore LCP advises, among other things, to further sharpen the recommendations of the Pension Federation on cost reporting on a number of points. LCP also recommends to strive for greater uniformity in defining and presenting costs.

KAS BANK research on asset management costs
KAS BANK's own research shows that the costs of pension asset management in 2013 fell by 1 basis point to 0.53% of the invested assets. The research is based on the Financial Assessment Framework (FTK) reports of pension funds which are used for reporting towards the Dutch regulator De Nederlandsche Bank (DNB).

Benchmark initiative KAS BANK
In 2011 the Dutch Pension Federation urged pension funds to put their costs into perspective through cost benchmarking. KAS BANK started, in cooperation with a number of pension funds, a benchmark initiative, the so called Cost Benchmark for Pension Funds. The costs of a single pension fund are compared with the benchmark and peer group. The report provides information on the cost breakdown of pension funds.