The costs associated with running the Canada Pension Plan (CPP) have tripled since 2006, according to a Fraser Institute report released September 3.
The costs include spending by the CPP Investment Board, which manages and invests CPP assets. As well, they include the federal government’s costs of running the plan.
In fiscal 2006-07, the Fraser Institute said, the costs associated with managing the CPP were $600 million. By fiscal 2012-13, this number had risen to $2 billion.
However, said the institute in the report, the CPP Investment board said 2012-13 costs were much lower at $490 million.
“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,” said study co-author and former chief economic analyst for Statistics Canada Philip Cross.
“A full examination of all costs shows that CPP is not as low-cost as they want you to believe.”
The difference between what the investment board said the costs were and what the Fraser Institute found, said the think tank, exist because the investment board’s numbers do not include external consultant fees or the costs associated with acquiring assets.
“Contracting out investment strategy consultation may be justifiable but excluding those rising costs from reported expense ratios is not,” Cross said.
The full breakdown of the actual costs of running the CPP, said the Fraser Institute include the $490 million as reported by the CPP Investment Board, $782 million for external management fees, transaction fees worth $177 million and federal government administrative costs of $586 million.
The Fraser Institute said there needs to be more transparency so the public fully understands how much the CPP costs to administer.
“Every dollar spent on running the CPP is one less dollar available for Canadians who contribute a portion of their paycheques to the plan, so it's vital that the CPP is as efficient and as transparent possible.”
The full report can be found here.
