Recommendations on Administrative Costs

The Dutch pensions sector has taken rapid action to make all costs transparent. At international level too we see developments reflecting a pressing concern for cost transparency, notably in asset management. The Federation of the Dutch Pension funds applauds these moves and warmly supports such action wherever possible.

This present document addresses many considerations pertaining to administrative costs. Recommendations on Administrative Costs were first issued in 2011. They can be summarised as follows:

1 Report pension management costs in euros per participant. The number of participants is the combined number of active participants and pension beneficiaries.

2 Report asset management costs as a percentage of average assets under management. Review these costs also in relation to:

• the chosen investment mix and relevant benchmark costs;
• the return over a longer term, also relative to the benchmark return.

3 Report transaction costs (or estimates thereof) as a percentage of average assets under management.

These three key recommendations relate primarily to transparency on administrative costs for external stakeholders like pension fund partici­pants and affiliated employers. Alongside these key recommendations this revised version sets out a number of recommendations that pension funds may adopt voluntarily.

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