Cost Transparency at a crossroads
EIOPAs opinion on the supervisory reporting of costs and charges of IORPs is aiming to assess the value for money and affordability of occupational pension schemes.
Members and Trustees require evidence led value for money KPIs from their service providers, who oversea investment and administration. At the same time, key stakeholders want to thoroughly understand the underlying attributes of performance, and how investment decisions create better outcomes for members, stakeholders, and society as a whole.
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EIOPA - thorough its ‘Opinion on the supervisory reporting of costs and charges of IORPs’ - is seeking to push this message across Europe and is using the Dutch cost transparency model as a centerpiece solution to drive a new era of EU cost transparency for IORPs.
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IBI through enhanced product innovation - that includes leading academic bodies - has acquired the skillset and the infrastructure to build a Pan-European cost transparency platform, that: ‘enhances the value for money offered to members and beneficiaries, the cost efficiency of IORPs and the affordability for sponsors’ as outlined in EIOPA’s Opinion on the supervisory reporting of costs and charges of IORPs.
High fees can significantly erode pension fund returns over the long term.
Analyzing the impact of fees on benchmarked performance allows for informed fee negotiations, cost reduction strategies, and maximizing net returns.
Studies by the OECD have revealed that annual costs and charges of just 1% of assets can significantly impact the final pension income, reducing it by more than 20% over 40 years of savings. This translates to a substantial increase in contributions needed to achieve a desired level of retirement income.
OECD
Study on The Impact of Fees on Pension Fund Performance
The Role of Technology
Harnessing Technology: Empowering Pension Fund Performance Benchmarking
Technology plays a pivotal role in modern pension fund performance benchmarking, enabling efficient data collection, analysis, and reporting.
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By embracing technology, pension funds can streamline their benchmarking processes, improve data accuracy, and gain valuable insights for better decision-making. Technology-driven benchmarking empowers pension funds to optimize performance, mitigate risks, and drive successful outcomes for their members.