Carrying out a cost transparency exercise lets asset owners see what costs are being incurred in practice at a much deeper and more granular level than they ever have before, and provides a more complete understanding of the type and level of costs that are being incurred as part of the ongoing management of a pension scheme’s assets. This includes the managers’ annual management charge but also other costs such as administration, custody, and transaction costs, which can be material but go largely unreported.

Having this information available helps to inform decision-making by allowing a like-for-like comparison to be carried out between managers. It also helps with assessing value for money in light of past performance and the mandate’s ongoing role in a scheme’s investment strategy.