Asset managers working on the new Local Government Pension Scheme (LGPS) for England and Wales are now able to sign up to a transparency code as a way of boosting their attractiveness for mandates.
The voluntary code focuses on shedding light on investment cost and fees applied by asset managers to the administering authority of the pension fund.
Managers that conform to the code must create an automated annual reporting system with their client for relevant fees and transaction costs within 12 months of signing up. Pension funds can request these reports on a quarterly basis.
The reports must be presented using templates created by the LGPS board. There are separate templates for segregated portfolio management and for pooled funds.
If an investment manager operating a segregated mandate invests in a pooled fund as part of that mandate, the reporting will be done via the manager’s own template.
Speaking on the code’s launch, KAS BANK UK product manager Stewart Bevan, said: “It’s excellent to see the cost transparency debate take another major step forward at the PLSA conference. The transparency code launched by the UK’s LGPS looks like a significant contribution toward better cost disclosure for pension schemes.”
“Adoption will develop into best practice in time, but real success will be achieved once all this information is presented in a meaningful way for schemes, and used by trustees to make better-informed investment decisions for their members.”
The code was developed to assist LGPS administering authorities in gaining greater clarity on investment fees and was created in partnership with the the Chartered Institute of Public Finance and Accountancy, along with other key stakeholders.
The LGPS pooling project is set to launch in April 2018.
