A third of defined benefit trustees reported their scheme’s running costs rising by more than 50% in the past year, while nine in 10 trustees said costs have gone up by more than 10% over the past 12 months, new research reveals. On average, costs went up 37%. 

Trustees attribute the biggest increases to actuarial services (19%), technology and data services (19%), as well as covenant services (13%). Legal and administrative services, at 8% each, were least often mentioned as having the highest increase. 

The trustees unanimously said costs increased by at least 5% in the past year, according to the survey of 100 trustees by DB and defined contribution provider TPT Retirement Solutions. 

 “An average increase of 37% in running costs is unsustainable and makes it important for trustees to assess the value for money that they are receiving,” said Nicholas Clapp, commercial director at TPT. “Managing running costs is particularly important if a scheme is considering run on as part of its endgame solution.” 

The survey also asked trustees about other challenges, with nearly all those polled (99%) saying the pace of new regulations had been a big challenge in the past year. Nearly four in 10 (38%) said new environmental, social and governance regulations, including TCFD-reporting, were the most challenging to deal with. 

More than a fifth (22%) found the new DB Funding Code and the General Code the most challenging. The same proportion cited the Pension Schemes Act 2021 as the most difficult piece of regulation to deal with. The 2021 act gives greater powers to the Pensions Regulator, introduces criminal sanctions, requires climate risk disclosures, and provides the legal frameworks for collective DC schemes and the pensions dashboards.  

Clapp believes that as the regulatory environment becomes more complex, “costs will likely continue to increase as trustees increasingly rely on advisers to support them”.