The Transparency Task Force has issued an open letter to the Work and Pensions Committee to emphasise the need for greater transparency of costs and charges in the pensions industry.

Directly addressed to the Committee’s chair Frank Field and numerous MPs, the Task Force outlined that the provision of “transparent, consistent and straightforward disclosure of all costs and charges” that members pay for defined benefit and defined contribution pension schemes is necessary.

The letter highlighted to the Committee that DB and DC schemes can no long be addressed fully under the scope of its existing DB pensions inquiry.

TTF founding chair Andy Agathangelou explained that, at present, the opacity of pension and investment costs result in decision-makers being unable to make informed choices, risks of future litigation where consumers may not be treated correctly and so damage confidence in the sector, poor consumer financial outcomes leading to significant losses and the risk that the government’s auto-enrolment policy may be jeopardised if members are disappointed about net cost returns.

In addition, TTF highlighted that the lack of transparency can also have a negative impact on the work of investment governance committees and trustee boards who struggle to manage scheme costs as “You can’t measure, monitor or manage what you cannot see”.

The letter was concluded discussing the need for industry-wide transparency “for the long-term benefit of all” and noted that a Work and Pensions inquiry into this would support the work of the DWP, FCA and TPR on the matter.

A list of industry signatures succeeded the letter.

Agathangelou, commented: “It is perfectly clear from recent debates in the Commons that all sides of the House are keen for greater transparency in pensions, because that will drive better outcomes for the UK’s pensions-savers. The Financial Conduct Authority’s Asset Management Market Study has done a superb job in shining a light on the many problems within the Asset Management, but that’s just one link in the ‘value’ chain. For example, there are costs in areas such as administration, platforms, distribution, invoicing, communication and so on that also need properly accounting for.

“What is needed is an inquiry that takes a holistic view on all costs adversely impacting pension schemes. In fairness to asset managers it’s not just their sector that needs sorting and the inquiry would broaden the debate accordingly. The timing is perfect, because the Market Study concludes in the summer, by which time the Work and Pensions Committee may have already given the Financial Conduct Authority and The Pensions Regulator a steer on what else they might want to look into. The inquiry would be “a tide to rise all boats” and it seems to me that Parliament, the Regulators and all right-minded market participants see the need. My fingers are crossed that Frank Field MP and his Committee see it that way too; I hope so, as they are best-placed to carry out this truly vital work.”

The open letter can be viewed here.

Share Story: