Greater transparency of costs and charges could save the average pension fund £800,000 a year, the Association of Member Nominated Trustees has said.

The AMNT has stated that an increased transparency of costs and charges for pension funds could have a significant impact on investment strategy, assist in cutting risk and ultimately advance value for money for members.

The AMNT noted that with greater transparency, costs of 1.69 per cent of assets fell to 0.82 per cent of assets. As a result, on a typical sized fund of £100m, this could represent a saving of £800,000 per year. It found that a saving of this size could affect investment strategy and help to decrease risks.

These conclusions were drawn from an independent study conducted earlier this year for an existing pension scheme by a forensic accountant that looked at three stages of continued improvement. These were ‘be clear about total costs – including direct and hidden costs; measure; then monitor’.

Overall, a key finding drawn from this was the fact that a ‘what gets measured can be managed’ approach could significantly improve the financial position of pension funds.

Speaking at the Transparency Taskforce conference in London today, AMNT co-chair David Weeks, said: “Transparency is not a race to the bottom as some opponents try to pretend. It is about creating an environment for better outcomes. It is about value for money for members. It is what trustees do.

“This analysis makes it clear that we must work as an industry to achieve much higher levels of transparency in financial services because, people must be encouraged to save more in their working lives. If we want them to be able to fund themselves for an increasing numbers of retirement years, we must deliver, and be seen to deliver, prudent and open costs and charges.

“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, with member outcomes benefiting directly – as this analysis shows, the average pension fund could stand to benefit from savings of around £800K per year which could have positive benefits for reduction of risk and achieving target returns.”

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