Across the pensions and wider investment universe we are increasingly hearing the topic of costs and charges being discussed. Asset owners are seeking greater insights into the costs they are incurring and at the same time, regulators and industry bodies are devoting more time and effort to providing a framework which will capture and disclose these costs.

Despite transparency never having been more in demand, the discussion can often feel distant from the day-to-day running of a pension scheme. This guide aims to give a high level introduction to the topic of costs, highlighting some of the key themes and areas that are often misunderstood.

Stewart Bevan, Cost Transparency Specialist

Many of the costs and charges the industry is talking about occur when investing, behind the scenes and are often misunderstood, unknown or unmeasured. This has led to a sense of costs being a mysterious, complex topic. There have also been numerous reports suggesting hidden costs are significantly eroding pension pots and raising the spectre that pensioners face the prospect of having insufficient money for their retirement.

Starting the journey towards transparency of costs can feel daunting, but it is vital to begin that journey. This guide intends to give you a basic understanding of where costs lie in the investment cycle and how they affect your scheme. Costs come in various shapes and sizes, affect different asset types in different ways and can often present themselves differently in DC compared to DB schemes. We will not attempt to address them all in this guide, but we will explain the major cost categories and how they would apply to a traditional DB setup.

We hope that by reading this guide you will feel confident that whilst some of these costs may be difficult to obtain, they can be better understood. Clarity and transparency are the best way to improve understanding and if you’d like to find out more or discuss your costs in further detail, we’d be delighted to help you.

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