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Results Overview

Cost scores were based on 41 questions across four components common to all, and eight questions for member services. Member services represented 10 per cent of the total cost factor score but were only applicable for organisations that administer benefits in addition to managing the fund. This weight was redistributed to the other factors for funds that do not administer benefits, thus each individual fund would always receive a score out of 100.  

There are barriers to comparability in reviewing costs across the globe. The differences in tax treatment, organisation/plan types, and accounting and regulatory standards means that it is difficult to find common ground for assessment. Thus, the review is not meant to be a comprehensive review of all cost disclosure elements as they vary from region to region and even from fund to fund. Rather, it is focused on the material areas common to most funds.

The average country cost factor score was 51, up slightly from last year’s review score of 48. Individual fund scores ranged from 7 to 93. The lowest-scoring cost component continued to be transaction costs (country average of 26), followed closely by detailed asset-class cost disclosure (country average of 35, up from last year’s average of 32).

As the dispersion in scores suggest, cost disclosures varied considerably in completeness. There was a wide range of quality as well, though qualitative factors were out of scope. Disclosures were better when the pension fund (defined benefit or defined contribution) was a single-purpose entity rather than a silo of a larger organization such as a wealth management company or a government department.

The Netherlands continued to lead the way with the highest country score of 80. The top three cost factor scores were held by The Netherlands, Canada and Australia. The primary distinguishing factor of these leading funds is the strict regulatory environment that they operate in. 

Average score

Highest score

Cost questions asked

Overall Results Cost.

Year-on-Year Comparison

Cost Ranking

1.The Netherlands





6.United Kingdom

7.United States



10.South Africa






“It’s not what you pay a man, but what he costs you that counts.”

Will Rogers


One common problem for stakeholders of large funds is incomplete and inconsistent cost transparency. Most costs reported to stakeholders are those that are explicitly paid (e.g., through written cheques or wire transfers) and exclude material costs that are netted from returns or from AUM. This is especially true for external management fees and transaction costs, two of the most material expenses for asset owners.

Generating adequate net investment returns is an absolute requirement for success for all funds. CEM’s asset owner performance database clearly shows that net returns are materially impacted by investment management costs, with approximately 75 per cent of gross returns above benchmarks going to pay related investment costs. Paying more does not necessarily get you more. Cost-effective investment management strategies generally outperform high-cost approaches over the long term. Costs matter. They should be understood, managed, and disclosed. 

The assessment of cost disclosures included 50 questions organised across the components below. They focused on the completeness, accessibility, and level of detail provided.

Annual reports and financial statements were the main sources of information used for scoring. Occasionally, funds also provided cost information on their websites. For a few countries, some cost disclosures were sourced from regulatory body websites. These disclosures were reviewed if they were referenced on pension fund websites or in annual reports.

1. Total fund cost disclosures (25% of factor score)
Questions focused on whether total cost and the various components of total cost were disclosed. Points were awarded for describing and discussing cost/expenses in a prominent location, not only in the financial statements. Marks were also awarded for: putting total costs in the proper context (e.g., as a % of assets or compared to prior years’); for clarity on what costs were included and allocated; and, for the completeness of disclosures.

2. Asset-class level disclosures, or investment option for DC plans (15% of factor score)
Asset mix is an important driver of total fund costs. The focus was on completeness and level of disclosure across the various asset classes. Points were awarded if funds disclosed additional context on why their costs might be different. Examples of contextualization include information on asset mix or cost trends.

3. Completeness of external management fee disclosures (30% of cost factor score)
External management fees are typically the largest investment cost, even for funds that manage high proportions of their assets internally. The focus was mainly on external management fee disclosures in annual reports and financial statements. Generally accepted accounting principles for reporting investment costs vary considerably by country. This means that external managed costs are often not fully disclosed in the financial statements themselves. However, points were awarded if these costs were acknowledged, quantified, and reported elsewhere, such as in management discussion and disclosure analysis, key performance indicators, etc. For DC plans, these questions were answered from the context of disclosure of option level costs.

4. Transaction costs (20% of factor score)
Transaction costs are also material, but similar to disclosure of external manager fees, difference in accounting standards results in inconsistent disclosure across funds. Marks were awarded for completeness as well as the level of detail included (e.g., estimating fixed income transaction costs based on spreads, market impact). For DC plans, these questions were answered from the context of disclosure of option-level costs.

5. Member service cost disclosure (10% of factor score, where applicable)
Some organisations managed both the investment function and benefit administration for plan members. For these organisations, member service cost disclosures were scored separately. In contrast to the investment functions, member service “returns” are not as visible, so it is doubly important to provide stakeholders with the information that lets them know that cost monitoring is in place and that incurred costs are reasonable. Cost disclosures were reviewed for completeness, context, and level of detail.