Average annual actuarial fees have dropped from 2010 to 2011, but slightly increased from 2011 to 2012, although they remain lower than in 2010, a survey by Kim Gubler Consulting (KGC) has found.

Comparing the results of 13 firms in 2011 and 20 firms in 2012, the survey looked at core services across schemes of 2,000, 5,000 and 10,000 members. It analysed annual actuarial fees, triennial valuation fees and year one costs.

As 2010 was a popular year for valuations, KGC questioned whether this affected the fees and if so, whether we will see the same pattern for 2013, another popular valuation year.

While actuarial fees are normally viewed on a scheme size basis, KGC looked at the average fees on a per member basis for the different sized schemes. In general a 2,000 life scheme will pay between 2.75 and 3 times more than a 10,000 life scheme on a per member basis, compared to a 5,000 life scheme which will pay between 50 per cent and 58 per cent. There is a significant cost differential across all years between the large and small schemes, the consultancy said.

Furthermore, average triennial valuation fees for the large schemes have reduced by over 20 per cent, compared to 8.5 per cent for the schemes with 2,000 members. This difference is even more marked in the average year one fees, where average fees for a scheme with 2,000 members was reduced by 4 per cent, compared to around 19 per cent for those with 5,000 or 10,000 members.

KGC research analyst Hayley Mudge said: “Economies of scale can explain some of the differences but with more competition in the 2,000 life market it is interesting that the reduction is not more comparable. Have the providers reached a peak in their ability to automate in this area or is it just the underlying fixed cost of meeting compliance?”

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