IBI together with the IBI Sounding Board, has succeeded to develop an accessible and low cost benchmarking which allows Dutch pension funds to participate using a user friendly online survey interface. The introduction of the first IBI Benchmarking over 2013
was exciting, whilst expectations have been widely surpassed. The IBI Benchmarking report was very well received by the participants, as the report gave many new insights to the pension fund boards and proved very useful to communicate costs with stakeholders.
IBI Benchmarking is careful to relate costs to individual decisions regarding the cost drivers and the risk profile. In this way, costs and returns made clear in a balanced and comparable way.
To compare costs through benchmark costs, IBI Benchmarking developed the IBI Benchmark™. This is in line with the Recommendations on Administrative costs of the Federation of the Dutch Pension Funds. For more information, see page Asset Management Costs. The Board of trustees can deviate from the IBI Benchmark by its decisions made. An illustrative example is the choice of an asset manager charging an above average fee, delivering above average returns.
Below is an example of a graph of a cost comparison.
Indices and key figures
Below are the main indices and key figures from the report that provide talking points to present and explain the performance of the pension fund.
IBI Indices ™ bring both the asset management and pension management costs in relation to the underlying activity, such as policy, diversification, risk and returns, and service levels and complexity, this relative to the peer group of comparable pension funds as well as the universe. In this way arise qualitatively comparable figures. The average of the universe is 100. For instance, an IBI Alpha Index™ above 100 means that the pension fund is managed more active than the average. This then justifies higher costs.
- IBI Asset Allocation Index™, shows how the degree of effective diversification of your portfolio compares to that of the IBI universe and your peer group
- IBI Alpha Index™: defines how your share of actively managed investments compares to the IBI universe and your peer group.
- IBI Implementation Index™: defines how your share of indirectly managed assets compares to the IBI universe and your peer group.
- IBI Transparency Index™ (for asset management and pension management costs) shows how the transparency level of the reported cost category compares to the IBI universe and your peer group.
- IBI Hardness Index™, shows how the degree of hardness of the asset management costs (management fee and performance-related fees) compares to the IBI universe and your peer group.
- IBI Service Index™, shows how the level of service provided by your pension fund compares to that of the IBI universe and your peer group.
In graphs insight into yields and (components) of administrative costs of the pension fund are set in relation to the IBI Indices.
- IBI Asset Allocation Index™versus returns of asset mix
- IBI Asset Allocation Index™ versus costs of asset mix
- IBI Alpha Index™ versus the costs of excess returns
- IBI Implementation Index™ versus the costs of the asset mix
- Total returns of the asset mix versus total costs of the asset mix
- IBI Service Index™ versus pension management costs