Unison is advocating the government should introduce legislation in next year’s Pension Bill to make cost disclosure templates mandatory.
Speaking before the Work and Pensions select committee in Parliament today (5 December), Colin Meech, Unison’s national officer for pensions and investments, said he and his colleagues were in "constant struggle" with trustee boards and employer sponsors for them to undertake transparency exercises and disclose their costs with investment managers.
He said: "We are currently in two transparency exercises running in two utility companies. If you take the 6,000 defined benefit schemes [that exist in the UK] and you do one a week, it is going to take 403 years, so there needs to be some impetus to the process."
Five templates already produced by the Financial Conduct Authority's (FCA) Institutional Disclosure Working Group, chaired by Chris Sier, will cover charges associated with most asset classes, but are not compulsory.
The group, set up last year, has urged pension funds to probe the honesty of their asset managers.
Mr Meech told MPs trustees were "reticent to undertake cost transparency exercises" and the same applied to officers of the pension fund "just in case it brings up issues that they didn’t know about".
He said: "Unless there is a statutory requirement to do so, it will take a long time to percolate through. There is an opportunity in the upcoming Pensions Bill [to introduce legislation]."
FTAdviser reported in October that Guy Opperman, minister for pensions and financial inclusion, wants to introduce a comprehensive private pensions bill in 2019.
Mr Meech is a member of the Local Government Pension Fund (LGPS) advisory board, which is part of the Cost Transparency Initiative (CTI), which will run a pilot with a number of pension schemes and asset managers to test the cost disclosure templates, before rolling them out industry-wide.
Nigel Peaple, director of policy at the Pensions and Lifetime Savings Association (PLSA), which is also involved in this project, told the Work and Pensions committee that he feels "very positive" about the work of the Institutional Disclosure Working Group and "genuinely optimistic" about the cost transparency initiative that will roll out the templates to schemes over the next year.
He said: "My experience with trustees with pension schemes is that they are very persuaded by the importance of their fiduciary obligation to look out for their members, so I think they will enthusiastically adopt the templates."