The Cost Transparency Standard (CTS) Information Centre provides comprehensive information about the CTS and access to all relevant resources.
INFORMATION CENTRE
The Cost Transparency Standard (CTS) Information Centre provides comprehensive information about the CTS and access to all relevant resources.
The Cost Transparency Standard (CTS) in Ireland replicates the Cost Transparency Initiative (CTI) which was introduced in the United Kingdom in 2018.
The Pensions Authority in Ireland, announced the introduction of the Cost Transparency Standard (CTS) at the IAPF Conference in March 2024, and The Pensions Authority issued a formal statement on July 16, 2024.
A briefing on the CTS for industry leaders was given on June 25, 2024 in a joint presentation by Brendan Kennedy, Pensions Regulator at The Pensions Authority; Jerry Moriarty, CEO of The Irish Association of Pension Funds (IAPF); Michael D’Arcy, CEO of The Irish Association of Investment Managers (IAIM); and Tim Brown, Head of Market Engagement for Europe at ClearGlass Analytics.
The Pensions Authority has made it clear that it expects pension funds to demonstrate that optimal value for money is being delivered for pension fund members.
At the IAPF Spring Conference on March 13 2025, Brendan Kennedy, The Pensions Regulator, gave a speech on priorities for the Pensions Authority for 2025. One of the key priorities highlighted was the imperative for Pension Fund Trustees to evidence they are optimising Value for Money for their stakeholders. Following this speech, the Pensions Authority has issued a statement further clarifying their position.
Background to the Cost Transparency Standard (CTS)
April 8, 2025
The Authority has endorsed the CTS as a process to allow trustees of pension schemes to understand and benchmark the investment costs paid on behalf of members. The CTS builds on a similar initiative in the UK which has been successful in helping trustees both understand and compare those investment costs.
Costs and value for money are an important part of the Authority’s engagement with pension scheme trustees. The information provided by CTS will be a useful input into that dialogue. The Authority will expect those schemes which are not participating in the CTS process to have equivalent data, from whatever source, including a comparison of the costs of related investments across the industry.
The Authority favours a voluntary approach to cost transparency, benchmarking and disclosure. Through its supervisory activities, the Authority will closely monitor the success of the voluntary regime. However, in the longer term if cost disclosure and comparability are not adequate, the Authority will seek legislative change.
It is nearly five years since the Code of Practice for trustees was first published, and the Authority will conduct a review this year. No significant change of direction is planned, however, there will be some clarifications and responses to issues that have arisen since the document was first published. Participation in the CTS and value for money benchmarks will be an area of focus of this review.
Pension funds participate in The Cost Transparency Standard (CTS) so that detailed and comprehensive cost and performance data can be obtained from asset managers employed using standard format prescribed CTS templates. Crucially, data is collected at the mandate level (as opposed to the fund level) so that precise actual outcomes are captured and can be compared against outcomes on other mandates in the same investment strategy, with appropriate scale adjustments.
Because CTS data is requested from asset managers by their clients, and because asset managers provide the mandate-specific CTS data themselves, subsequent findings from market analytics cannot be challenged.
Market positioning analytics enable both pension funds and their advisors, and asset managers employed, to understand how the costs incurred, and performance delivered, on a mandate rate relative to other mandates in a given investment strategy. Value for money being defined as the outcome delivered for the money spent.
The Cost Transparency Standard (CTS) is agnostic about asset allocation and focuses solely on value for money being delivered on individual mandates relative to the wider market.
Statement by The Pensions Authority
Optimising outcomes (value for money) for members of pension funds is a fundamental fiduciary obligation for trustees, and creating an environment in which this can be achieved is a core objective.
For the Cost Transparency Standard (CTS), data is always collected on the standard format and prescribed CTS templates at the mandate level. This means that market comparisons are both precise and always entirely valid.
And because the CTS replicates the format of the Cost Transparency Initiative (CTI) in the United Kingdom where asset managers sell similar products as in Ireland, the costs and performance of any mandate in either Ireland or the United Kingdom can be precisely and accurately compared against a very large dataset in any investment strategy, and a true value for money assessment made.
Finally, and to confirm the need for the Cost Transparency Standard (CTS), market-wide analytics based on huge volumes of completed CTI templates by over 550 asset managers in the United Kingdom have confirmed the following:
1. Wide dispersion of outcomes in both costs and performance for comparable products between different asset managers.
2. Wide dispersion of outcomes in costs for clients of a single manager for exactly the same product.
The conclusions of the leading academics in this field in the United Kingdom who have studied the CTI data are as follows:
1. Institutional asset owners and their advisors previously had no access to accurate data which enables them to assess whether the costs incurred, and performance delivered, on a mandate represent value for money relative to the wider market.
2. Asset managers have also previously had no access to accurate data which enables them to assess whether the costs they charge, and performance they deliver, for a mandate represent value for money relative to the market.
3. Data which has been available (published fund factsheets, and cost surveys with limited scope and scale) does not reflect actual costs and leads asset owners and their advisors to base pricing and value for money reporting on incorrect premises.
Value for Money
The CTS Template
The CTS Template is a standard template used for reporting for ALL mandates (other than Private Markets for which there is a dedicated template) and, for most types of mandates, only a proportion of the fields will require completion.
As an example, for this Global Passive Equity mandate, only the fields identified in yellow would require completion.
What is Delivered for Trustees
ClearGlass Ireland generates CTS Cost Transparency Reports confirming full details of costs and performance (and all associated costs) for each mandate.
Pension Fund Trustees (or their advisors) simply provide details of mandates held by asset managers employed. No other work is involved for trustees.
Acting on behalf of Trustees, ClearGlass Ireland asks the asset managers involved to complete CTS templates for each of the mandates.
ClearGlass Ireland provides asset managers with very clear guidelines for CTS template completion, supports them with completion of CTS templates, processes and verifies the data provided.
ClearGlass Ireland generates CTS Cost Transparency Reports including full details of actual costs and performance for each mandate placed with all managers in a single report, and in a standardised format.
ClearGlass Ireland generates CTS Value for Money Reports for all mandates in each investment strategy.
Participating in the Cost Transparency Standard (CTS)
ClearGlass Ireland generates CTS Value for Money Reports for each mandate by investment strategy showing the outcome delivered by the asset manager relative to outcomes delivered for all other mandates in the market for which data is held.
CTS Information Resources
The CTS Information Centre now provides access to all information resources including the prescribed CTS Templates.
For More Information or Support
Contact us on info@vfm.ie