Colin Meech CWC conference 2018 Cost Transparency

Why do fund managers drive Maserati but we don’t?

UK Market: Cost transparency – increasingly in the news

UK Developments 2013 Office of Fair Trading report on DC costs 2016 LGPS takes Dutch template and updates it Creates code of Cost Transparency FCA Asset Management Market Review July 2017 – and establishes Institutional Disclosure Working Group DC scheme trustees must report on costs as of April 2018 Template updated again – due to be published this Month Parliamentary Work and Pensions Committee inquiry into pension fund costs closed September 3rd

The pension fund economic cycle Any surplus money has to be invested by law – LGPS investment regulations Fund managers who have been hired by your pension fund buy and sell assets The investment returns are sent back with trading costs extracted but we no one knows what they are in detail Contributions paid in – your deferred pay 6% plus your employer contribution Benefits are paid out this is collective intergenerational solidarity

Would you buy a car without knowing the cost? Consumers do know how much it costs to buy a car, service it, by parts for it and measure its performance (MPG) set by the manufacturer No lay person or pension scheme understands costs incurred in the management of our money Pension funds’ cost of production is therefore unknown – reductions in costs improve the performance – but you cannot do this without knowing the cost Hidden costs eat our pension away – costs make employers close DB Hidden costs impose burden on employers and mean less for jobs, wages and investments

Code of Transparency The Code - 90 managers signed up covering £280b in assets - over 40% of total assets and over 90% of listed equity assets £21b £16b £36b £5b £4b £11b £13b £9b £4b £5b