UK - "The average administration cost per London council scheme member is £126 (€188) compared to only £44 for metropolitan council funds," the Audit Commission finds in its study on London council pension funds.
As reported, the commission states the creation of one London ‘super-fund' "run by one pension authority whilst retaining individual councils' funding arrangements" as an option to solve the problem of inefficiency. Cutting administration costs to the level of other metropolitan council founds would save £34m per year.
The differences in costs are only partly attributable to the ‘London effect' of higher costs of salaries and office accommodation, but also to the smaller scale of the London schemes "which means they do not benefit from the same economies of scale as other councils," the commission states in a press release.
"'London pension funds cost significantly more to administer than the national average. Our study has identified the reasons for the higher costs, and some options for securing significant savings," says Steve Bundred, chief executive of the Audit Commission.
The report was distributed to key stakeholders. The London Pensions Fund Authority confirmed that it had received a copy. CEO Mike Taylor stated in a press release that the LPFA "will be seeking to consult widely with its stakeholders, (including employers and fund members) and our colleagues in other London administering authorities before issuing a formal response to the report".
Currently, the 32 London boroughs' pension fund assets are totalling £11.8bn with 414,000 members. "On average each fund is worth £355m and has 13,000 members", the study finds.