UK pension funds miss out on fee savings-report

* Pension funds could 'negotiate harder' on fees * Management fees should be one quarter of current level

LONDON, March 15 (Reuters) - UK pension funds, especially smaller schemes, are squandering a chance to get a slice of at least 100 million pounds ($151.7 million) in fee savings a year, a report published on Monday said.

The report by consultancy Lane Clark & Peacock (LCP) said that, in the wake of the financial crisis, fund managers are prepared to renegotiate fees they charge, even for relatively small mandates, potentially opening up for the first time saving opportunities currently only available on larger mandates.

Larger pension schemes have negotiated with managers on charges following the market crash, but the report said that managers are now in the market for broader concessions.

"We were expecting managers to negotiate with mandate sizes of 200 million pounds or so, but we were quite staggered when all bar one or two said they would negotiate on fees even for relatively small size mandates," said Mark Nicoll, the author of the report based on a sample of 68 UK fund managers.

"Trustees could negotiate harder," he said, adding the 100 million pounds savings figure was conservative.

Nicoll, who is head of investment management research, conceded trustees are still facing a lack of a "reliable source" of fees charged in the market place to use as a reference point.

He also said flat management fees pension schemes are charged should be one quarter of what they are now, while performance fees, paid for extra returns, should be higher.

Nicoll said that for a 50 million pound global equity mandate, the typical management fee is 40 basis points or 200,000 pounds, which once paid the pension funds cannot claw back.

"We would encourage fund managers to start at a lower level, perhaps around 50,000 pounds," Nicoll said.

He said that while LCP has made such a request on behalf of its pension fund clients, it had not yet succeeded.

"If there were pressure to do that, if more and more trustees pushed for much more favourably structured performance fees, the managers would respond to that," he said.

For a four percent outperformance, they would earn 115 basis points in performance fees, up from the current typical rate of 80 basis points. ($1=.6594 Pound) (Reporting by Cecilia Valente; editing by Simon Jessop)