Workplace pension providers will no longer have disclose to members the fees on all fund options, after the industry lobbied the regulator for a change in these rules.
The Financial Conduct Authority has published an amendment stating that workplace pension providers, trustees and IGCs will only be require to disclose fees and charges on a representative range of funds and investment options.
Its original proposals were for this fee disclosure to apply to all fund options. After a consultation this proposals has been changed. The FCA said there were concerns that would mean a “huge number of illustrations” would be generated which may be of “questionable benefit” for scheme members.
Schemes will initially only have to to disclose costs and charges for default options and funds, with this increasing to a representative sample of funds that members are able to select. However schemes will still have to show the compounding effect of aggregated costs and charges on this sample.
In this policy statement (PS20/2) the FCA also clarified a number of other concerns on how asset managers must calculate transaction costs to ensure potentially misleading information is not given to members.
The policy statement confirms that all scheme members must get an annual communication which includes a brief description of the most recent costs and charges information available, and how it can be accessed. This information should be made available, on request to members’ spouses and civil partners
Schemes should also publish this information free of charge on a publicly available website. This information should be updated annually within seven months of the end of each scheme year.
These new rules will be effective from April 2020. They follow on from rules introduced last year which required asset managers to report transaction costs and other charges to operators, trustees or manages of workplace pension schemes.
These rules stem from the FCA’s Institutional Disclosure Working group, set up in 2018 and led by Dr Chris Sier, which agree templates for cost disclosure by asset managers to pension schemes and other institutional investors.
The FCA is also consulting this year on clearer and simpler charge disclosure for members of non-workplace pension schemes.
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