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Costs and charges

The Automatic Enrolment Programme is bringing more people into workplace pension saving in the UK. To ensure that savers are nudged into appropriate products, the Government requires all schemes used for automatic enrolment to meet minimum standards with regards to the level of charges and the information for members.

Beyond the workplace DC pensions market, regulators have introduced, or are in the process of introducing, a number of changes to the way that the costs and charges of investing are disclosed to consumers. Regulators have focused on ensuring that reported costs are comprehensive, and described so that investors can see the full picture of the costs they are likely to incur or have incurred.

These initiatives include:

  • the recast Markets in Financial Instruments Directive (MiFID II)
  • PRIIPs Regulation
  • the FCA’s competition market study of the asset management market.

Transaction cost disclosure

On 6 April 2015 rules came into force imposing a duty on the governance bodies of DC workplace pension schemes (IGCs or trustees) to request and report on the level of charges and transaction costs, to inform their value for money assessments.

In response to the release of PS17/20, the ABI and IA have worked together to develop a data capture template specifically aligned to the new FCA rules for UK DC pensions. The IA has since undertaken further work to address some of the frequently asked questions on the original template, in consultation with the ABI and members of both associations. You can find the final documents on the IAs website. It is hoped that it will be widely adopted to enable consistent data sharing between pension scheme operators and asset managers, however, the use of the DCPT is not mandatory and it may therefore be the case that data from asset managers is requested and received in a variety of formats.

In addition, the ABI has drafted a briefing (available here) which sets out the regulatory background, and context for the data template.