Government and regulatory focus on costs and charges will shift to defined benefit (DB) schemes over the coming years, PTL has predicted.
The current spotlight on fees faced by defined contribution (DC) savers is largely the result of the government's drive to get more people saving, as well as trustees' duties to ensure members are receiving value for money.
However, the nature of disclosure will be different in DB than DC, the professional trustee firm added.
At an event today on hidden costs and charges PTL client director Donny Hay said there has been clear regulatory drive on the DC side, despite the size of the DB world.
"There has been an awful lot going on around costs and charges, both in Europe and the UK," he said. "The regulatory drive has been to have clearer information so investors can take better decisions.
"[In the UK], it has been the Department for Wok and Pensions (DWP) and the Financial Conduct Authority (FCA) that have driven things here. It has been very much focused to date on DC. That's interesting because DB has been around a lot longer.
"All the legislation has been focused on DC and the reason for that is the introduction of auto-enrolment (AE). The government is keen to see that there are no mis-selling scandals."
He added: "It started in that corner because the government has had that particular driver to introduce compulsion [through AE] and it will spread to DB."
There has been some legislative and regulatory movement on improving transparency in DC schemes over the past year. Last month the FCA announced that, from 3 January next year, all regulated firms looking after DC funds will be required to disclose transaction costs when requested by DC trustees.
Meanwhile, the DWP has suggested it will consult on improving cost transparency for DC schemes in the near future.
For this reason, director Alison Bostock added that "Pandora's Box has been opened", and suggested the government is keen to ensure asset managers have not simply reintroducing fees lost by the introduction of the charge cap "around the back".
"The driver is very much around all those millions of people who have been plonked into these schemes, so there is this desire to make sure that they are not being ripped off."
Yet, she said it would be unlikely for any such requirements for DB to mimic those in DC, where trustees and independent governance committees need to disclose costs in their annual chair statements.
"You can really separate the two worlds [DB and DC] at the moment," she said. "These groups have got a lot of work to do to improve their understanding and then make the value for money assessment.
"DB is quite different. I probably wouldn't go down the route [of reporting] to DB members, because they don't have any real interest in the investment."
Rather, DB trustees will want this information to assess value for money in terms of their asset managers' trading efficiencies, helping them in their selection or re-selection of managers.
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