A year after the Cost Transparency Initiative (CTI) published a framework of tools and guidance to help institutional investors better understand their investment costs, the initiative is today launching additional resources and encouraging remaining schemes and asset managers to adopt the standards.
The CTI framework, a partnership initiative between the Pensions and Lifetime Savings Association (PLSA), the Investment Association (IA) and the Local Government Pension Scheme Advisory Board (LGPS SAB), is an industry standard designed to allow investment managers and asset owners to collect and compare costs and charges in a standardised and transparent form. The initiative provides clarity for asset managers about what data to supply and allows pension schemes and asset owners to compare costs between managers and drive better value for their savers and investors.
The templates and guidance required to adopt the standard are completely free to use and downloadable from the CTI website ready for the 2020/21 reporting timeline.
Asset managers, pension schemes and their advisers, have already made huge efforts to ensure the CTI framework becomes the industry standard. Three quarters (74%) of respondents to a recent PLSA survey of schemes and consultants say they have a good level of awareness of CTI and the majority have already requested costs information using the CTI templates. Feedback from service providers demonstrates strong levels of take up of the CTI framework from schemes ranging in size and structure including DB schemes, LGPS pools and DC Master Trusts. Awareness is expected to increase further as we move through this year’s cycle of reporting periods.
The Local Government Pension Scheme (LGPS), representing £291bn in assets and 5.9m members, incorporates the CTI framework in its Code of Transparency. As of 1 April 2020, all UK LGPS pension funds and pools now make use of CTI standard reporting.
Also signed up are some of the largest pension schemes in the country: DHL Pensions Investment Fund Limited, Kingfisher Pension Scheme, National Grid UK Pension Scheme, Nest, RBS Group Pension Fund, Royal Mail Pension Plan, Smart Pension, Superannuation Arrangements of the Universities of London (SAUL), The People’s Pension and Universities Superannuation Scheme (USS). Combined these schemes represent around £150bn in assets and 19m members.
The new tools and guidance published today by the CTI and which remain completely free to download and use include:
- A new Fiduciary Management Template
- Additional reporting fields on the Liability Driven Investments (LDI) Template
- Real estate investments guidance on completing the templates
- ILPA/CTI mapping guidance for private equity investments
- Additional FAQs and guidance, including on timeline and expectations
- Additional case study and webinar resources
The existing Main Account Template, Private Equity Template and User Summary, which are available in different formats, remain the same.
Over the course of the year, the CTI Board and secretariat has kept in close, ongoing contact with the Government, regulators (Financial Conduct Authority (FCA) and the Pension Regulator (TPR)) and other external organisations, to ensure the CTI framework is kept current and in step with any policy or statutory developments. Additionally, the Department of Work and Pensions (DWP), FCA, TPR and Trades Union Congress (TUC) continue to hold ‘observer’ status on the Board. Many schemes have been adopting CTI for the first time this year and have been providing very welcome feedback to the secretariat on their experience and lessons for ongoing improvement.
Further details, including case studies of schemes that have been getting value from the CTI in practice can be found via the CTI website.
Mel Duffield, Chair of the Cost Transparency Initiative, said: “With three quarters of pension schemes and consultants reporting a good level of awareness of the Cost Transparency Initiative and wide-spread take up from asset owners large and small, I am really pleased with the progress of this really important initiative to help investment managers and schemes report and understand their costs and deliver better value to savers.
“We are now entering a final push to encourage remaining schemes to adopt the templates and guidance and will continue to promote the benefits both savers and pension fund trustees’ can gain from their use. Over the rest of this year, the CTI Board’s Technical Expert Panel will continue to take forward and develop any additional resources and guidance, according to the needs of the industry.”
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