Bread today and jam tomorrow?


It’s good news to hear that the Sier Review on cost disclosure is six months ahead of schedule. The scope of the project is substantial and from Chris Sier’s speech to a forum of Pension Trustees last week, it looks as if his work is already being admired in the States. This is important, as to get the ongoing support of all stakeholders, Sier’s work must have global reach.

It is also encouraging that Sier’s working group will pick apart the complicated costs and charging structures of the more esoteric private equity and hedge funds. Within 18 months we can expect to see a comprehensive framework in place that will allow us to understand the value for money of practically any fund.

We would expect no less of Dr Chris Sier.

If I have a worry about the work of his group, it is that it may miss some of the low hanging fruit in its quest for completeness.

One such fruit that should be easy to harvest is the means to gather data used to calculate slippage between what a fund should have returned (with reference to the gross price changes of the underlying assets) and what it actually returned, after all costs were met.

Adding this figure to the explicit cost of managing a fund enables IGCs and Chairs of Trustees to establish the money element of “value for money”, at least for the element of a workplace pension that drive outcomes.

A template to measure slippage was created by Novarca and displayed on the FCS’s website when Novarca produced its report on costs and charges that led to CF16/30 and to some extent, the Sier report itself.

Novarca template

Novarca’s reporting template.


It would be very helpful if Chris Sier could review this work, amend it where the working group sees it failing and then pass it on to the FCA and DWP in time for the IGC reporting on value for money in April 2018.

Trustees and IGCs alike are keen to report to members and policyholders on whether the operators of workplace pensions have been getting value for money from their fund managers. In particular, this applies to the default fund.

I fear that if this template is not delivered this year, we will see the concept of value for money become associated with the member experience, not the member outcome.

For all the importance of good communications , accurate administration and strong at retirement assistance, outcomes are delivered by the net performance of funds after all costs and charges have been paid. It is not the member experience but member outcomes that are most of interest to ordinary people.

I have had the chance to discuss this issue with Chris Sier and know that his intention is to let nobody down but also to reasonably manage expectations.

Since so many have the expectation of a template this year, I hope that Chris will detail Gregg McClymont and his DC team to deliver such a template I a timely way











About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to Bread today and jam tomorrow?

  1. George Kirrin says:

    I expect analysis paralysis after hearing that the PLSA have got in on the act, as follows:

    “The PLSA Cost Transparency Working Group is being set up to support the PLSA’s work as part of Dr Chris Sier’s Institutional Disclosure Working Group (IDWG), which was set up in response to an FCA recommendation from its Asset Management Market Study final report. The IDWG’s objective is to provide disclosure templates for a variety of investment management costs and charges. PLSA would like our own cost transparency working group to provide both technical expertise and the trustee view on what we would find really useful in terms of cost disclosure.”

    I’m old enough to remember the Pension Fund Disclosure Codes dreamed up by the Investment Management Association (now the IA) and the PLSA’s predecessor, the NAPF, with a first version issued in May 2002, needing a second version issued in March 2005. A fat lot of good they did.

  2. henry tapper says:

    “Analysis paralysis” was the phrase I was grasping for George. Let’s hope that someone takes a step back and considers another useful phrase “tiny steps”.

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