(September 30, 2013) — The Teachers’ Retirement System of Louisiana (TRSL) has revealed its peer-beating cost reduction exercises have saved more than $7 million in fees.
Following analysis by the Toronto-based CEM Benchmarking—which compared TRSL against similarly sized US pension systems in the areas of investment performance and pension administration—TRSL was found to have saved $7.2 million, primarily because it has been able to negotiate lower investment management costs.
In addition, TRSL’s administration cost per member was $88 compared to its peer average of $96 during fiscal year 2012.
It also outscored most of its peers on customer service, driven in part by years of investment in its online self-service platform for members and employers.
TRSL Director Maureen Westgard said the she thought hers was the only retirement system in the state which operated with such a rigorous third-party assessment, but that the results were paying dividends.
“It’s truly a 360-degree view of everything we do in our investment of assets and our processing of retirement benefits. We use the results as a tool to ensure we manage our resources efficiently and effectively,” she said.
The challenge of negotiating fee levels has gathered pace in recent months: a study by MSCI in July found corporate defined benefit pension plans were putting more pressure on providers to lower fees than their public sector counterparts.
Fee dispersion—the spread between fees paid at the 90th and 10th percentiles for mandates between $50 million and $100 million—showed the most variance, with large cap core managers seeing their prices move by as much as 50 basis points.
Small cap core came next with 45 basis points, while large cap value fees were one of the most consistent, with a dispersion of 23 points.
Related Content: Hedge Funds: Are High Performance Fees Worth It? and Challenge on Fees, or Lose Money, Investors Told