The costs of running a DB scheme have increased by an average of 37 per cent in the past year, with a third of trustees reporting increases of more than 50 per cent.
Research by TPT Retirement Solutions found that all 100 DB trustees surveyed said they had seen costs rise int he past 12 months, with nine out of 10 reporting rises of more than 10 per cent.
When broken down, trustees highlighted actuarial services, technology and data services, and covenant services as the expenses that had increased the most. The first two were cited by almost 20 per cent of trustees.
At the other end of the scale fewer trustees cited significant increases in either legal and administrative services (both mentioned by just 8 per cent of trustees).
Beyond increasing costs, almost all trustees polled (99 per cent) said they had found the pace of new regulations a major challenge in the past year.
In particular, nearly four in 10 trustees (38 per cent) said that new ESG-related regulations rules, such as TCFD reporting, were the most challenging to deal with.
The new DB Fund Code and General Funding Code were seen as the most challenging by 22 per cent of trustees, while the same number considered the Pension Schemes Act 2021 as the most difficult piece of regulation to navigate.
Alongside these challenges, 29 per cent of trustees polled viewed accessing different asset classes as a significant challenge. Meanwhile pensions dashboards readiness (24 per cent), covenant negotiations (23 per cent), and scheme administration (23 per cent), were also commonly cited issues.
TPT recently launched its DB Connect solution, enabling schemes to enjoy some of the benefits of consolidation without having to change their trustee board.
Schemes retain their legal structure and trustee board, but have access to anintegrated service proposition that can simplify processes and ease administration, actuarial, and legal services costs, with fiduciary management provided by TPT Investment Management.
This uses a collective fund structure which aggregate the assets of the master trust with those of external pension schemes, generating immediate scale benefits across a wide range of asset classes.
TPT Retirement Solutions commercial director Nicholas Clapp, at says: “Our research has found trustees are finding the current regulatory and price environment very challenging. As the regulatory environment becomes more complex, costs will likely continue to increase as trustees increasingly rely on advisers to support them.
“An average increase of 37 per cent in running costs is unsustainable and makes it important for trustees to assess the value for money that they are receiving. It is the perfect time for trustees to review the current operating model and to explore options to mitigate these increasing expenses. Managing running costs is particularly important if a scheme is considering run on as part of its endgame solution.
“Consolidation may prove to be a highly sought-after solution to the issues trustees are facing. We have designed DB Connect to help offer a valuable solution for trustees that can manage complex regulations and uses scale to reduce the costs of running a scheme.”
