Smaller schemes are paying around 150 per cent more per member in administration fees than larger schemes, a new survey has found.

KGC’s 9th administration survey found that the average unit cost per member for a scheme with around 1,000 members is £22.41, compared to £54.60 for a scheme with 20,000 members; an increase of around 150 per cent.

However, the survey did find that administration services are becoming more inclusive, with around 45 per cent of participants offering all 46 core tasks in their standard fixed fee. These include services such as implementing and maintaining up to date membership records, complying with requirements for defined benefit and defined contribution transfers, member enquires, maintaining investment transaction records and providing LTA information to pensioners.

Based on this result, KGB questioned whether smaller schemes are not being offered access to automation which could more than halve their costs or whether smaller schemes’ data isn’t fit for automation.

“With scheme returns having to include scores for both common and scheme specific data, we believe attention should be focused on administration and the data underpinning it,” the report said.

From a governance perspective, KGB found smaller schemes are still only offered on average administration attendance at two trustee meetings a year. Their larger counterparts receive four. “This could be because smaller schemes have less administration issues to discuss. However, our experience is these schemes have the same issues but with less assistance on offer,” KGB said.

Commenting on the report, author Hayley Mudge said: “This year’s survey was a very interesting one. We are seeing a step change with administration no longer sitting at the bottom of trustees’ agenda, and data following closely behind. We would like to see smaller schemes formally engaging with their administrators more. This will give administration the place at the table it deserves. After all, just because schemes are small doesn’t mean they have fewer or less important issues to discuss.

“Unfortunately, there will always be a variance in fees between large and small schemes, trustees need to make sure they’re justified. For trustees and employers looking for value, it’s a balancing act between cost versus the services needed for their individual schemes. We firmly believe trustees should start with scoping out the services they need before negotiating price.”

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