UK should learn from Dutch example in order to quickly implement beneficial cost reporting for pension funds.
03 Mar 2016
“In my opinion, the UK industry would benefit by introducing a flexible and progressive standard as soon as possible, built upon the tried and tested model provided by the Dutch."Stewart Bevan, KAS BANK’s Product Specialist for Cost Benchmarking
Earlier today, the Financial Services Consumer Panel (FSCP) released a paper, written by Dr Christopher Sier, entitled “The drive for cost transparency for UK pension funds”. In this paper Dr Sier makes the following observations and recommendations with respect to the development of cost transparency in the UK:
– Costs are not truly understood in the UK, despite it being seen as an advanced pensions regime
– Research indicated pension scheme costs are best understood in The Netherlands
– In order to successfully implement cost transparency in the UK we should learn from The Netherlands and use their example as the basis for any standard here
– The UK should start with a simple voluntary standard set by the industry, before the regulator feels required to step in and enforces a mandatory reporting standard
– The process should be evolutionary and the first steps must be easy in order to build out a functional reporting standard as quickly as possible
– The development of an independent utility to deliver this service is proposed in order to capture, collate and process this data on behalf of the industry
Stewart Bevan, KAS BANK’s Product Specialist for Cost Benchmarking, says of the paper: “We welcome the findings and recommendations of Dr Sier in this paper and view this as a further catalyst in the drive to implement an effective cost transparency standard in the UK.”
“In order to move ahead quickly I find the paper’s suggestion of introducing a voluntary standard of reporting, rather than a regulatory one, particularly encouraging and this echoes our recent calls to action for the industry.”
“In my opinion, the UK industry would benefit by introducing a flexible and progressive standard as soon as possible, built upon the tried and tested model provided by the Dutch. Drawing on KAS BANK’s experience as the market leader in The Netherlands for cost transparency, we could quickly provide a simple or fairly advanced standard template tailored for UK pension funds through our understanding of their requirements.”
“We must appreciate that this standard will evolve over time as we learn from our experience of reporting in the UK. Rather than hesitate, this is the time to begin to implement a solution to address the problem of undisclosed pension fund costs. As the paper says, it is about the art-of-the-possible rather than the art-of-the-desirable.”
“The concept of setting up an independent utility is interesting but will require further consideration; I look forward to being part of this discussion moving forward.”
In The Netherlands, we provide the leading benchmark for pension scheme costs and is acknowledged as a cost transparency expert in the UK. Our position as an independent, dedicated pension fund specialist in the UK, Netherlands and Germany means we are uniquely positioned to drive forward innovation on data driven topics, including cost transparency reporting.