Disparities in local council pension fund fees

There are disparities in the fees that local council pension funds pay to their fund managers, according to research by the Financial Times (FT).

The newspaper’s analysis of pension funds’ annual reports, which was conducted for the FT by consultancy Investor Data Services, revealed that some councils were paying three times as much as other UK funds of the same size.

The research comes after Brandon Lewis, local government minister, launched a review into whether the 89 local authorities across England and Wales are managing their pension portfolios effectively.

The research also revealed:

  • Staffordshire County Council, which had a £2.62 billion fund in March 2012, paid £7.152 million for fund management in 2011-12, while Devon County Council, which had a £2.68 billion fund in March 2012, paid £3.3 million.
  • The quarter of funds with the most expensive investment management fees paid an average of more than four times (£43.9 million) as much as the quarter of funds with the cheapest fees (£10.5 million).
  • Concentration of fund managers is falling, with the top five managers accounting for 38% of externally managed assets, down from 56% a decade ago.
  • UK council pension funds had £187.3 billion between them at the end of the last financial year.