The impact of scale, complexity and service quality on the administrative costs of pension funds 1

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 chapter 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 US. 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%.