Pension schemes may be ‘cutting corners’ when re-tendering fiduciary managers in order to meet new regulatory deadlines, Hymans Roberson has warned.
The pension consultant claims this could lead to poorly negotiated fees and inappropriate mandates leading to poorer member outcomes.
This stark warning comes ahead of June deadline to comply with recommendations set out by the Competitions and Markets Authority (CMA) as part of its industry-wide investigation into fiduciary management.
Hymans says that trustees making retender decisions solely based on time pressures could risk undertaking the process without a full commitment leading to poor outcomes for schemes.
Hymans senior investment consultant Samora Stephenson says: “The purpose of the CMA’s deadline is for schemes to ensure that fiduciary management provides value for money for pension schemes, while at the same time demonstrating good governance.
“We are concerned, however, that schemes could be heading into the process without advice as they rush to ensure compliance.
“A rushed process risks missing out on the best fees and not properly testing whether requirements have changed since mandates were set up. Schemes must ensure they don’t put speed first to make sure this isn’t a wasted opportunity to have the best fees and the most appropriate mandates.
“We believe that savings of up to 30 per cent, a significant saving, can be made with a thorough and professional negotiation process if it is done properly.”