Canada – The cost of running the Canada Pension Plan has more than tripled research finds

The cost of running the Canada Pension Plan has more than tripled, the result of transaction fees and external management fees, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

The study, Accounting for the True Cost of the Canada Pension Plan, spotlights the costs of administering the CPP, which includes spending by the CPP Investment Board, a Crown corporation that manages and invests CPP assets, as well as costs incurred by the federal government to run the plan.

“Contrary to claims of proponents of an expanded CPP, or a provincial pension plan in Ontario, many of the costs of large, government-managed pension plans like CPP are hidden. A full examination of all costs shows that CPP is not as low-cost as they want you to believe,” said Philip Cross, study co-author and former chief economic analyst for Statistics Canada.

Between fiscal years 2006-07 and 2012-13, the total cost of running the CPP jumped to $2 billion from $600 million, despite an investment board report that claimed its operating expenses in 2012-13 were only $490 million.

Why the discrepancy? The CPP Investment Board excludes from its operating budget a) management fees it pays to external consultants, b) transaction fees associated with acquiring assets and c) costs incurred by four federal government departments.

“Contracting out investment strategy consultation may be justifiable but excluding those rising costs from reported expense ratios is not,” Cross said.

Chosen excerpts by Job Market Monitor. Read the whole story at Canada Pension Plan costs triple as investment board spending skyrockets | Fraser Institute.