Recent Fraser Institute Study on Pension Costs is Faulty
ï»¿Canadian think tank the Fraser Institute recently published a study titled “Comparing the Costs of the Canada Pension Plan with Public Pensions Plans in Ontario”. Based on a comparative cost analysis of six Canadian public sector pension organizations, the authors reached three conclusions that “should be sobering for the proponents of large public sector pension plans”:
1. There is no systematic relationship between a pension plan’s size and its [operating] costs.
2. There may be diseconomies of scale for large public sector pension plans because of the complexity of implementing their investment strategies.
3. These more aggressive strategies raise costs.
Studies using the databases of CEM Benchmarking Inc., the premier benchmarking organization in the global pensions space, refute the first two Fraser Institute conclusions, and place the third in a constructive context.