Actuarial Fee Survey: Schemes overcharged for core services

Schemes of all sizes could be paying more than two and a half times more than their peers in actuarial fees despite increasingly competitive pricing, latest research reveals.

The second annual Kim Gubler Consulting Actuarial Fee Survey revealed discrepancies in smoothed annual costs of £37,000, £42,000 and £61,000 for schemes with 2,000, 5,000 and 10,000 members respectively.

This suggests some small schemes are paying 36% more than the average quote for the same services and some medium schemes are paying 30% above average.

The least competitive pricing was for large schemes, with some providers asking for 57% above the average quote.

However, this shows an improvement on last year’s results with the difference between the highest and lowest quotes provided down by more than a third for schemes in all three categories.

KGC senior partner Kim Gubler said: “It is disappointing the ranges between highest and lowest fees at all scheme sizes are still broad, but what was pleasing was real evidence that competitiveness is increasing year on year.”

The consultancy asked 14 actuarial firms to cost a scenario with schemes closed to new members but open to accrual, with a mixture of active, deferred and pensioner members.

Costs for annual, ad hoc and triennial services were then blended to give a total Year One cost.

Gubler said fees were moving in the right direction and firms were finally coming to terms with the commercial reality that schemes only wanted to pay premium fees for premium work.

“However, this wasn’t evident across all services or all scheme sizes, so it proves that trustees really need to look closely at what they are being charged for all their core services.”

Click here for more detail on the survey.