UK - Schemes could be paying hundreds of thousands of pounds more in annual administration fees than their peers, research from Kim Gubler Consulting reveals.
The second KGC Administration Fee Survey found total year one costs for implementation and servicing could vary by up to £400,000 ($645,000) for larger schemes, depending on their administrator.
Fees varied by £130,000 for smaller schemes and more than £200,000 for medium-sized schemes.
Senior partner Kim Gubler (pictured) said: “Given that the survey fees are for a basic core service, the differentials are surprising. Potentially some trustees could be paying many hundreds of thousands more in fees than their peers.”
The poll asked 19 pension administration providers to quote fees for schemes of 2,000, 5,000, and 10,000 members with a realistic breakdown of deferred, active and pensioner members.
Respondents were divided into admin-driven third-party administrators and consulting-driven employee benefits consultants.
Gubler observed: “It’s been difficult to discern a reason for the large discrepancies - it is not consistent across type of firm, in other words consultancy or administration driven.”
However, she added administration-driven firms’ fees were surprisingly uncompetitive for larger schemes.
The report breaks down the fees quoted into annual administration fees, pensioner costs, treasury and accounts fees, and implementation fees, as well as providing total year one costs.
Gubler said discrepancies in the costs of administering and paying pensioners would be a growing concern.
“Given the increasing maturity of schemes, this could really become an issue,” she said.
Gubler noted that trustees who engaged positively with their administrators tended to get the best value.
“If trustees are looking to review, then there are some newer players entering the competitive market that are definitely worth a look - but interestingly we’ve found that just because you’re looking at a big name you’re not always looking at a premium fee,” she added.
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers