The Irish Association of Pension Funds (IAPF) has launched a Cost Transparency Standard (CTS) with the full support of the Department of Social Protection (DSP).

The CTS, which was first announced in March this year, is a voluntary framework but the Pensions Authority has stated that it expects schemes to participate. The authority plans to closely monitor the success of the voluntary regime through its supervisory activities. It has not ruled out mandatory participation through legislative change in the future, if cost disclosure and comparability are not adequate.

The Pensions Authority said participation in the CTS will enable trustees to better understand the investment costs they pay and to benchmark these costs against their peers. The CTS builds on the requirement in the Pensions Benefit Statement to provide a breakdown of the costs deducted by the scheme.

“Pension scheme trustees have responsibility for achieving good outcomes for the members and beneficiaries of their scheme. Scheme costs have an important bearing on these outcomes, and therefore trustees should know the costs that their pension scheme is incurring and be able to justify the value received for these costs,” the authority said.

“Costs and value for money are an important part of the authority’s engagement with pension scheme trustees. The information provided by CTS will be a useful input into that dialogue. The authority will expect those schemes which are not participating in the CTS process to have equivalent data, from whatever source.”

As part of the framework, pension schemes will require their asset managers to complete CTS templates for every mandate placed with them. The IAPF is working with ClearGlass to facilitate the introduction and implementation of the CTS. ClearGlass has produced the prescribed CTS templates and will also process the data and present the results to the schemes. However, schemes are free to use other means or providers to analyse their costs.

Commenting, IAPF CEO, Jerry Moriarty, said: “We are pleased to introduce this initiative which we think will be an important aid to trustees in ensuring they fully understand the costs they are paying and establishing that they are achieving value for their members.”

As part of the introduction of the CTS the IAPF has arranged a series of live CTS information programmes available for asset owners and their advisers. All asset owners registered for the CTS can attend and they will be able to select a date to join an information programme with CTS registration.

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