U.K. defined contribution plans will have seven months beginning in April to disclose administrative and investment costs and fees, the U.K. government said Tuesday in a response to consultation on disclosure of costs, charges and investment fees in DC occupational plans.
The U.K. government consultation from October through December followed the implementation in September of rules by the U.K. Financial Conduct Authority regarding transaction costs and fees. Starting this year, money managers and insurers are required to disclose information about investment fees when requested.
"Whilst we have given these concerns careful consideration, (plans) will be responsible for publishing the costs and charges within seven months of the first plan year-end date to fall on or after April 6, 2018," the government said.
The first plans will have until Nov. 6 to publish the information. "We believe this gives scheme adequate time to implement the proposals, particularly as we are not being prescriptive about how the information is presented. Communicating the information effectively is likely to be an iterative process where trustees learn from feedback and from their peers, and a further delay would simply delay the learning process," the government said.
The FCA rules now enable independent governance committees and trustees to obtain data on charges and transaction fees, calculated according to a standardized methodology from money managers and investment firms.
In addition, the U.K. government said investment disclosure must be available at participants' request beginning in April 2019 and the data provided must be no more than six months old at the point of request.
"As a trustee and somebody who is fully convinced by the benefits of cost transparency both to the industry governance and ultimately for the end users, I'm encouraged by (the Department for Work and Pensions') initiative for disclosure of costs and their assertive approach," said Pat Sharman, U.K. managing director for KAS BANK, in an email. "Adoption will develop into best practice in time; however, I am surprised that trustees will be expected to report on costs by November 2018, when the FCA's industry consultation is still in its infancy and trustees need assistance and guidance with the process."
Separately, the U.K. government is working with FCA officials as they prepare another set of rules for fee disclosure by workplace personal pension plans, which will have a consultation period in the second quarter this year.