The authors are grateful to CEM Benchmarking, Inc., for providing the data, Jack Bekooij for excellent research assistance, and participants of the research lunch seminars of DNB (May 6, 2010), the Annual Netspar Pension Workshop, Zurich (June 10–11, 2010), the National Business and Economics Society 10th Annual Conference, Curacao (March 9–12, 2011), the Superannuation and Pension Funds Summit, Santpoort (March 31–April 2, 2011), the Western Economic Association International Bi-Annual Pacific Rim Conference, Brisbane, Australia (April 26–29, 2011), and the ICPM May 2011 Discussion Forum, Rotman International Centre for Pension Management, University of Toronto, Toronto (May 16–18, 2011). The views expressed in this article are personal and do not necessarily reflect those of APG or DNB.
The Impact of Scale, Complexity, and Service Quality on the Administrative Costs of Pension Funds: A Cross-Country Comparison
Article first published online: 23 NOV 2011
The Journal of Risk and Insurance, 2011
Journal of Risk and Insurance
Volume 79, Issue 2, pages 477–514, June 2012
How to Cite
Bikker, J. A., Steenbeek, O. W. and Torracchi, F. (2012), The Impact of Scale, Complexity, and Service Quality on the Administrative Costs of Pension Funds: A Cross-Country Comparison. Journal of Risk and Insurance, 79: 477–514. doi: 10.1111/j.1539-6975.2011.01439.x
- Issue published online: 23 MAY 2012
- Article first published online: 23 NOV 2011
Administrative costs per participant appear to vary widely across pension funds in different countries. Using unique data on 90 pension funds over the period 2004–2008, this article examines the impact of scale, the complexity of pension plans, and service quality on the administrative costs of pension funds, and compares those costs across Australia, Canada, the Netherlands, and the United States. We find that, except for Canada, large unused economies of scale exist. Higher service quality and more complex pension plans significantly raise costs. Administrative costs vary significantly across pension fund types, with differences amounting to 100 percent.