Performance: magazine for investment management professionals

Article

A more objective alternative for pension fund reporting

Performance magazine #24

As a general rule, investment management costs are compared by expressing fees as a percentage of assets under management (AUM). A list of the highest and lowest asset management costs is published by Pension Pro and the Dutch Central Bank (DNB), among others. This may lead to incorrect conclusions with potentially detrimental consequences for investors, the pension sector at large, and the specific pension fund in question. Higher costs may be due to investment in investment categories with higher expected returns or, for example, in a more diversified investment portfolio. The next step for the sector is to use objective indicators to compare pension fund performance.

To the point:

  • There is an increasing need for cost transparency.
  • Cost reporting recommendations have not been adequately implemented by the pension sector.
  • Scoreboard journalism is an undesirable consequence of the appetite for cost transparency.
  • An objective comparison between pension funds may be achieved by providing a balanced overview of the capability in relation to the return on investment of the portfolio and long-term comparisons.
  • A more objective image for pension funds may be obtained by including the pension scheme’s level of service and complexity in the cost comparison.

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Performance magazine, issue 24

Performance magazine

Performance is our triannual magazine for investment management professionals that intends to provoke reflection with cutting-edge articles combining facts, information and insights.

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More information?

For more information on investment management and pensions please contact Evert van der Steen via evandersteen@deloitte.nl / +31882882978 or Ivo van der Veen via ivanderveen@deloitte.nl / +31882886058.

 

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