Survey: Schemes Are Overcharged for Services

(August 11, 2011) — Despite increasingly competitive pricing, a new survey has found that schemes of all sizes could be paying more than two and a half times more than their peers in actuarial fees.

The research examined the fees levied at small, medium-sized, and large schemes for routine pension fund tasks by more than a dozen actuarial firms.

More specifically, the research found that actuaries are increasingly competitive when accessing fee structures for smaller schemes in the UK, according to a pension consultancy’s survey of fees charged for core services. “Interestingly, it seems this year the majority of firms’ fees are above the average annual actuarial fee, compared to last year when the majority were below. This indicates the improved competitiveness shown in the smaller schemes is not so evident here,” the survey said.

The findings showed that some small schemes are paying 36% more than the average quote for the same services and some medium schemes are paying 30% above average. Meanwhile, the least competitive pricing was for large schemes, with some providers asking for 57% above the average quote.

“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,” KGC senior partner Kim Gubler told Professional Pensions, noting that fees were moving in the right direction. “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.”