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Yes, public pensions are cheaper

These expenses can be considerable. For example, an estimated 40% of the $1 trillion in Canadian mutual fund assets is retirement savings-related (e.g., RRSPs and TFSAs). If the holders of this $400 billion pay the reported average mutual fund fee of 2%, their annual expenses amount to $8 billion.

This compares with a combined annual cost to run the CPP of about $3 billion (roughly $2 billion for the CPP Investment Board, including external investment fees, and $1 billion for the administration of the CPP).

Based on these assumptions, the CPP runs about 38% cheaper than Canada’s mutual fund sector.

And, what about expenses on a per capita basis? About five million Canadian households invest in mutual funds. If we assume they’re also the collective owners of the $400 billion in mutual fund assets held for retirement purposes, their average per household expense for management and administration of their private retirement plans works out to about $1,600 per year.

CPP DURING Q1 of 2016

$268.6 billion of net assets, up from

$264.6 billion at the end of fiscal 2015

$0.2 billion of a net investment loss

$4.2 billion in net contributions

-0.1% net investment return

 

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