Pension Cost and Performance Benchmarks

Improving cost transparency for pension funds

Understanding Pension Costs

Pension funds in the UK now have greater access to cost data through the Cost Transparency Initiative.

When asset managers complete the Cost Transparency Initiative (CTI) templates, the cost, performance, and asset allocation data for the mandates they manage on behalf of pension funds, the pension scheme trustees get a clearer picture of the costs for their mandates.  

 

Benchmark Performance Against the Market

While this cost data gives trustees a detailed picture of their own mandates, it does not give them a view of the wider market. They can’t see the costs for comparable mandates and investment strategies, and then make informed decisions about what their data really means.

Analysing pension cost data, McLagan produces benchmark reports which show a pension fund’s mandates vs the relevant market, i.e. compared to mandates of similar size and equivalent strategy.

As these benchmarks compare both costs and performance against the market, this gives pension funds and their advisers the insight into the data they need to make informed decisions about their strategies.

How to use Benchmarks

Understand your costs

Assess fees and expenses paid against comparable mandates in the market

  • How much am I paying asset managers for each mandate? How do the fees breakdown?
  • How do the fees stack up relative to the market?
  • What are the cost trends in the market vs my mandates?
 

Understand your mandate performance 

Build a clear picture of how the mandates are performing

  • Compare fees paid vs AUM and performance
  • Which of the mandates are under/over performing?
  • What is driving the difference?


Enhance your governance 

  • Monitor costs and performance trends
  • Which mandates/strategies need reviewing?
  • Identify priority action areas

See how your mandates compare against the market.

Helpful Resources

Contact our team today to learn more

 

Mark Miles
Partner, McLagan
United Kingdom

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Nicholas Chambers
Associate Partner, McLagan
United Kingdom

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Ready to Learn More?

Contact our team today to take the next step in improving cost transparency for pension funds.

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