Opportunities for employers to save money on investment manager fees

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04 Dec 2025

This months edition of XPS Express for employers underscores the importance for employers to reassess their investment governance model. It's essential to ensure that the fees your scheme incurs are appropriate given your current funding position and the required balance between return and risk.

By reviewing these fees, employers may discover savings that could provide significant support as your scheme progresses toward transactions with an insurer or adopts a safe run-on strategy.

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Key developments: at a glance

Funding positions of most defined benefit (DB) pension schemes have materially improved in recent years.
As a result, many schemes are adjusting their investment portfolios to target buyout or adopt safe run-on strategies. The previous need to chase returns to close funding deficits has largely disappeared, making investment strategies more straightforward.
Although scheme trustees remain responsible for setting investment strategy, they may delegate decisions to Fiduciary Managers, who charge additional fees for this service. These higher fees may no longer be justified where funding has improved and less investment risk is required.
Employers have a greater role in defining the scheme’s long-term strategy under the new Funding and Investment (FIS) regulations. A key part of shaping that strategy is understanding the current investment governance model.
Reducing investment manager fees can accelerate the implementation of an insurance transaction or reduce ongoing expenses for schemes that run on, increasing surplus available.

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