Increasing transparency of costs and fees in asset management to improve pension fund performance

Iain Clacher


The costs and fees that are charged by the asset management industry are extremely complex and lack transparency. UK pension fund trustees are responsible for £2tn of pension fund assets, which is equivalent to 105% of UK GDP, and most of this is invested through the asset management industry. Even a small percentage saving on these costs therefore has the potential to have a significant impact on the pension outcomes of millions of UK citizens, because of the scale and also because these costs are not saved in just one year, but over the life of the scheme and so there is a significant compounding effect.

The lack of transparency in asset investment costs and fees has historically raised industry-wide concerns about pension fund trustees’ ability to make the best or optimal investment decisions, that as a result some funds would have a worse performance and that this ultimately leads to individuals being paid lower pensions in their retirement. Due to these concerns and a perceived lack of competition in the asset management industry, the Financial Conduct Authority (FCA) undertook a competition investigation of the asset management industry (The Asset Management Market Study, report published June 2017). This study led to the setting up of the Institutional Disclosure Working Group (IDWG) by the FCA with a remit to address the transparency problem and create disclosure templates which could be applied to the different types of investments that trustees make for pension funds (e.g. equities, bonds, and property). Clacher’s research expertise on asset and pension fund management and governance led to him being appointed as a member of the IDWG.

The body of research led by Clacher formed an evidence-base for the policy considerations of the IDWG and established the key criteria for Clacher to design a User Template for cost and fee disclosure. Clacher’s contribution to the IDWG included his leadership of a sub-group that was set up to design a User Template, which aggregates complex granular data into a more useable format for trustees to make effective decisions.

Key findings

The development of a new industry standard for institutional investment cost data, based on research by Professor Iain Clacher, has been instrumental in transforming how UK pension fund trustees make decisions when investing pension fund assets.

Clacher’s User Template was accepted by the Financial Conduct Authority and subsequently rolled out as part of the Cost and Transparency Initiative (CTI) of the Pensions and Lifetime Savings Association (PLSA). The PLSA now manages the standards and templates that were built by the IDWG in collaboration with the Scheme Advisory Board (SAB) of the Local Government Pension Scheme (LGPS) of England and Wales and the Investment Association (IA) which is the trade body that represents investment manager and asset management firms in the UK.

An industry expert confirms that Clacher’s research contributed to overall market cost savings circa £3bn in 2018/19. These and future savings compound and persist and have the potential to reach £2tn over the next 35 years through a combination of cost savings and improved decision-making by trustees.

Publications and outputs


  1. Holmes K, Faff R, and Clacher I. 2010. Style analysis and dominant index timing: An application to Australian multi-sector managed funds. Applied Financial Economics. 20(4), pp. 293-301. DOI: 
  2. Abouraschi N, Clacher I, Freeman M, Hillier D, Kemp M, and Zhang Q. 2016. Pension plan solvency and extreme market movements: A regime switching approach. European Journal of Finance. 22(13), pp. 1292-1319. DOI:
  3. Weiss-Cohen L, Ayton P, and Clacher I. (2020) Extraneous menu-effects influence financial decisions made by pension trustees, Economic Letters, 187, 108895. DOI:


  1. Mapping the trustee landscape
  2. Costs, fees and trustee decision-making
  3. Selecting fund managers and consultants — what do trustees look for?

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