DWP now leads the way on cost disclosure



David Gauke (sponsor)

David farrar

David Farrar (author)

What’s this about?

In a first-rate document, the DWP have set out radical proposals to allow ordinary people to see and compare the costs  their trustees are paying for the investment of their pension money.

These proposals go well beyond anything previously proposed by Government and will set a pole in the sand for the FCA – who intend to consult on how people who invest their money directly (personal pensions), will get this information.

You will notice that I’m already dancing round a pin with regards “ownership”!

The DWP has authority over trustees and their occupational pension schemes (that include master trusts like NEST, NOW and People’s Pension. The Treasury has authority over the operators of group personal pension plans (Aviva, L&G, Prudential etc.).

The DWP enforce through the Pensions Regulator (tPR) and the Treasury through the Financial Conduct Authority (FCA)

The DWPs fiduciaries are called Trustees and the FCA’s Independent Governance Committee’s (IGCs)  – clear so far?

This is all about “ownership”

Ownership is one of the few ideas that Government has right now and it’s a good one. Here is what David Gauke (head of  the DWP) on ownership.

dwp 8

This is the underlying reason the Government think they can intervene (in this radical way). Gauke goes on…


I’m am sure David Gauke (MP and Secretary of State, didn’t write all this), but this is his document, he owns it and I’m attributing these words to a Government who need to be and remain accountable. These are important principles, and the principle that an individual member has a right to own information about where money is invested and at what cost is one that I intend to hold both the DWP and the Treasury to.

This principle is radical and sets the tone for all else in the document, it should not be ignored.

What is being proposed?

This is not just a disclosure about what should be disclosed, it is about how it should be disclosed. Chair’s Statements must already disclose what is readily available and the work of the Sier Committee will mean that transaction costs will now have to form part of that disclosure. Nobody reads Chair Statements as they are lost in the pile of paper dumped on members every year.

In responses to the paper the DWP were told that members showed no interest in further disclosures and that the cost of disclosure would make for worse member outcomes (higher charges. The DWP has taken such arguments into account.


They have concluded that members do want to know how much they are paying and want to have some ownership of their money. Instead of stopping with the default fund, the DWP want to extend disclosure to all funds


This will have a radical impact on scheme design. I very much doubt that schemes that offer a wide range of funds (usually on a funds platform) will be too keen on doing so if they are creating a multiple obligation on trustees. This proposal will have a radical impact on scheme design for trust based DC plans (and probably for contract-based too).

The DWP proposals will mean that fund choice proliferation will cease.

On line is the default distribution mechanism


By insisting that members of schemes have on-line access to the costs of the funds into which they are investing, DWP open up this information, not just to members, but to the wider public. Is this a charter for benchmarking? The DWP makes it clear it is.


I intend to be one such “industry participant”. I intend to report true costs of owning funds , nominal fund reporting and risk adjusted fund reporting. I intend to provide a league table of all information needed to make value for money assessments on funds and I intend to publish it in a league table. I intend that information to be generally available to employers and members in a way that makes it clear who is winning, who is losing and who should be taking action to ensure they get and continue to get value for money.


The DWP online proposal opens the door to value for money benchmarking by trustees, employers and members

The Pension PlayPen applauds David  (both sponsor and author of this paper).

The information displayed needs to be relevant to the needs of those making decisions

I am pleased to see that the DWP are not requiring the Trustees to disassemble the engine and report on the performance of the carburettor, distributor  and engine block separately. Instead they will report on the performance of the motor- bundled.


Not only is this good for trustees, it is good for members, stopping a trend towards over-supply of unnecessary information that has caused considerable damage to past disclosure. For an example of simple cost disclosure – let’s take the Quietroom SMPI


While the DWP stop short of requiring pounds shilling and pence disclosure, Quiet room’s statement of costs is surely moving towards best practice!

A step along a road

The DWP’s paper does not conclude the matters, it simply takes us a step along the way,


I see no reason why we should not have day to day reporting on our workplace pensions available on our desktop, laptop, tablet, phone or watch.

How we choose to read information is up to us, the principle has been set out – it is our information. Those who are paid to manage our money have an obligation to disclose how and where our money is invested and the cost of the management.

Last night I renewed my friendship with John Godfrey who is back from a year in number 10 and working again with Nigel Wilson. I reminded him of Nigel Wilson’s promise to me that I would be able to see Legal and General investments on Google Earth! It hasn’t happen – please make it happen John and Nigel.

David Farrar likewise, please keep David Gauke pointing in the right direction. This paper is what was wanted, needed and expected! It has delivered and I thank you for it.

Please take this as the first consultation response – it’s an A* verdict from the Pension PlayPen!




About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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