Greater transparency of costs and charges could have a significant, positive impact on pension funds, according to The Association of Member Nominated Trustees (AMNT).

AMNT, a not-for-profit company representing 480 occupational pension schemes, says
'transparency could benefit pension funds by having a positive impact on investment strategy, helping to cut risk, and ultimately improving value for money for members.'

Independent analysis conducted earlier this year, looked at three factors; being clear about costs, measuring them, and monitoring them. The analysis, it says, enabled its members to develop the approach 'what gets measured gets managed.'

Speaking at a Transparency Taskforce conference in London, David Weeks, AMNT co-chair, emphasized the importance of transparency to the pensions industry.

He said: "Transparency is about value for money for members - it is what trustees do."

Weeks said the industry must work together to achieve much higher levels of transparency in financial services.

He said transparency would motivate more people to save during their working lives, which is essential to enable more people to fund themselves through retirement.

"We must deliver, and be seen to deliver, prudent and open costs and charges," he said, "If across the industry, we were to apply the simple mantra of 'what gets measured gets managed', we could achieve significant savings for pension schemes."

AMNT members have implemented this approach and the two key results were lowered costs and reduced risks.

Costs of 1.69% of assets came down to just 0.82% of assets which, on a typical fund of £100million, could represent a saving of £800k a year.

In terms of reduced risk, many AMNT members have funds that operate on a target return of around LIBOR plus 3%.

"Transparency is not a race to the bottom, it is about creating an environment for better outcomes," said Weeks.

First published 13.10.2016

Lindsay.sharman@wilmingtonplc.com