Trustees should stop ignoring their third party administration (TPA) fees as they may be in danger of paying too much, says Goddard Perry Consulting (GPC).

The employee benefits firm has claimed that trustees do not always give TPA fees the same level of attention as the fees of other services.

The firm said trustees should look at paying fixed fees, particularly as many defined benefit (DB) schemes are now closed and therefore the administrator has a fair estimate of the workload.

Steve Goddard, managing director at GPC, said: “There has been considerable press coverage recently on the issue of actuarial fees. Indeed not just the level of the fees themselves, but the disparity in fees especially for smaller DB schemes. It is entirely probable, in a similar vein, that many schemes are also paying a disproportionately high level of fees for their administration.”

Goddard added that more administrators are now offering a fixed fee approach. “Some even provide for no increases during the fee agreement period, so if trustees want to further control cost they must look at this now, especially before the 2012 target date for data cleansing.”

Paul Sturgess, director of DC policy and product development at Capita Hartshead, said it was right trustees reviewed the fees of all their services.

However, he added: “What I find interesting is that there is sometimes a miss-match between the format, as opposed to the amount, of fees that schemes state they want and what they actually utilise.

“This has been demonstrated by the results of our administration survey over the last couple of years. This may just mean that schemes want to change the fee format but the review process is not complete in situations such as when the market is evolving and there is a time lag.”

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