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UK Pension Funds Paying Millions in Hidden Fees
A recent analysis by ClearGlass, a data analytics company, revealed that UK pension plans are paying a staggering £1.5 billion each year in excess fees to fund managers. According to the research, some pension funds are paying up to 14 times more than they need to for the same investment products.
The Study Findings
ClearGlass analyzed 688 private and local government pension funds, representing £550 billion in assets, across 629 managers and 38,000 fund strategies. The results showed that pension funds are being ripped off by asset managers, who appear to be charging vastly different prices for the same products.
- One pension fund paid six times more than the lowest market price for a fixed income government bond index fund.
- Another pension fund paid seven times more than the lowest market price for a listed passive UK equity fund.
- A third pension fund paid 14 times more than the lowest market price for a fixed income absolute return fund.
Industry Reactions
The findings have sparked a controversy in the financial industry, with experts urging pension scheme trustees to take action.
- Chris Sier, CEO of ClearGlass, said, "Some clients are being treated unfairly. Asset managers appear to price in an extreme range, and offer different clients vastly different prices for the exact same thing."
- Mick McAteer, a former board member of the Financial Conduct Authority, said, "I think some pension funds are being ripped off, and some pension fund consultants are clearly not doing a good job on behalf of their clients."
Regulatory Reponses
The Financial Conduct Authority (FCA) has responded to the findings by saying that it has increased price transparency in the asset management industry. The FCA aims to boost competition and ensure that investment consultants are regulated.
Call to Action
The analysis has called into question the way in which pension funds are being advised and managed. It is clear that there are significant issues with transparency and disclosure in the industry.
- Experts are urging pension scheme trustees to demand better deals from their fund managers and consultants.
- The FCA has expressed its commitment to increasing transparency in the industry and ensuring that regulators are held accountable.
Conclusion
The findings of the ClearGlass study highlight the need for greater transparency and fairness in the asset management industry. It is essential that pension scheme trustees, fund managers, and consultants work together to ensure that savers receive fair value for their investments.
FAQs
- What is the main issue in the asset management industry?
The main issue is that pension funds are being charged significantly different prices for the same investment products. Some funds are paying up to 14 times more than they need to for the same products.
- Who is affected by this issue?
Pension scheme trustees, fund managers, and consultants are affected by this issue. It is critical that they work together to ensure that savers receive fair value for their investments.
- What is the impact of these high fees on pension savers?
The high fees paid by pension funds can affect the eventual payouts to savers in retirement. It is essential that pension schemes focus on delivering value to their members by securing the best deals possible for their investments.
- What can be done to address this issue?
The financial industry must prioritize transparency and fairness in order to address this issue. Regulators, such as the FCA, have a critical role to play in enforcing transparency and ensuring that the industry operates in the best interests of savers.
- What is the future direction for the asset management industry?
The industry will continue to evolve, with a greater emphasis on transparency, fairness, and value for investors. It is essential that the industry acknowledges the need for change and implements reforms to ensure that savers receive a fair deal.
Author: www.ft.com
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