LCP principal, Andrew Cheseldine, questioned McClymont on how advisers can disclose costs right down to total portfolio turnover charges, when these were different for every fund and depended on the level of active management involved, with the issue being made more complex when asset allocation calls mean some members move in and out of funds with frequency. It was also pointed out that the biggest transaction cost was stamp duty and that this was impossible to reflect in overall charges. Furthermore, how could the public be expected to understand the data which would be generated, said delegates.
McClymont told delegates that greater value for pension scheme members would only come if there are lower costs and charges, greater transparency, the restrictions on Nest are lifted and there is greater scale. He called for an ‘opening up’ of the investment channels so that members could be told if their fund was stock lending, saying he hoped the new FCA regulations enable full disclosure of charges to be made to employees, and not just to members.”
“Unless auto enrolment is seen to offer value for money, there’ll be a high opt out rate, but that is difficult to quantify that at the moment. Large employers are getting very good deals, but SMEs are not getting low charges,” he said.
Nest chief investment officer, Mark Fawcett, said the total cost of Nest to members would not be high because the investment managers were asset allocators, so the total cost of dealing was lower than for actively managed funds.
