The government has been urged to take a more holistic approach to pensions, by independent trustee and governance provider, Pitmans Trustees (PTL).

PTL says the government and industry must not overlook the fact there are other costs for pensions, despite discussion focusing on transaction costs.

The comments follow the Transparency Paper published by the Financial Conduct Authority in the latter part of last year.

Richard Butcher, PTL managing director, said: "Like many in the industry, PTL welcomed the FCA's Transaction costs consultation and Asset Management Market Study interim report, because of what they said about costs transparency."

"Anything that puts member outcomes central to its objectives, is a good thing."

But, he added, with much of the industry focus and discussion dedicated to transaction costs, there is a real danger that other costs will be overlooked.

"Transaction costs are hugely important, but just one piece of the jigsaw – there are other cost areas to consider including, explicit costs such as annual management charges, platform charges, members' charges, exit charges and holding costs - such as those charged by custodians, audit fees, and those for insurance with property investments."

Not only that, Butcher said, these costs vary, depending on factors like investment selection and whether any of these costs are bundled up into a single fee – so it's difficult to get a true picture of what a scheme is really costing its individual members.

"What the industry needs is a single measure to evaluate all of these complex costs in a holistic way," he said.

"Complete transparency may never be realistically achievable, but that doesn't mean schemes should be kept in the dark on the fundamental aspects of the costs they bear."

"Let's hope the FCA's focus on transaction costs is merely the first step in the right direction and not the last."

First published 12.01.2017

Lindsay.sharman@wilmingtonplc.com