TORONTO, ONTARIO--(Marketwired - Feb. 2, 2016) - When comparing the CPP to large public-sector pension plans in Ontario, bigger doesn't necessarily translate into lower investment and administrative costs, finds Philip Cross, former chief economic analyst for Statistics Canada, in a study published today by the Fraser Institute.

"Proponents of expanding the Canada Pension Plan and those in support of launching the Ontario Retirement Pension Plan often trumpet claims of economies of scale, implying the relative costs of these plans decline as they grow and accumulate more assets. Those claims are simply not true," Cross said.

The study, Comparing the Costs of the Canada Pension Plan with Public Pension Plans in Ontario, compares the total costs (investment and administrative) of five large public-sector pension plans in Ontario with the CPP (all headquartered in Toronto).

The analysis of these pension plans, ranging in asset values from $17 billion to $269 billion, finds that the plan with the highest asset value - the CPP - was the most costly (measured as a percentage of assets), on average, over the period 2009 to 2014.

Specifically, the CPP with $269 billion in assets had the highest average cost-to-asset ratio at 1.07 per cent during that time frame. The next largest plan covered in the study, the Ontario Teachers' Pension Plan with $154 billion in assets, was the fourth costliest with an average cost ratio of 0.63 per cent.

"The evidence shows larger public pension plans do not have a clear cost advantage over smaller ones. The CPP's reputation for low costs is coloured by incomplete comparisons that do not account for all related costs," Cross said.

The study also disentangles the two cost categories (investment and administrative) putting a microscope on the differences in investment costs across the various pension plans.

Again, there is no compelling evidence of any cost savings for larger public pension plans: OPTrust, the smallest fund in the study with $17 billion in assets, incurs the highest average investment costs (as a percentage of assets), followed by the CPP, the largest fund in the study. Meanwhile, the Ontario Pension Board, one of the smallest plans covered, has one of the lowest average investment costs.

"Costs for larger public pension plans may actually increase as the plan's assets grow due to the complexity of implementing investment strategies and the subsequent need to seek counsel from external experts. These more aggressive investment strategies raise costs," Cross said.

"The implications of this analysis are sobering for proponents of expanding the CPP or creating the new Ontario pension plan."

Costs (investment and administrative) as a percentage of assets, average from 2009 to 2014 arranged from smallest to largest plan
OPTrust 1.02 per cent
Ontario Pension Board (OPB) 0.49 per cent
Healthcare of Ontario Pension Plan (HOOPP) 0.34 per cent
Ontario Municipal Employees Retirement System (OMERS) 0.68 per cent
Ontario Teachers' Pension Plan (OTPP) 0.63 per cent
Canada Pension Plan (CPP) 1.07 per cent

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and broadly communicating the effects of government policies, entrepreneurship and choice on their well-being. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit

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For interviews with Philip Cross, please contact:
Aanand Radia
Media Relations Specialist, Fraser Institute
(416) 363-6575 ext. 238