The Canada Pension Plan Investment Board reported its operating expenses as $490 million in fiscal 2012–13, or 0.28% of its assets, up from 0.11% six years earlier, touting this as a measure of its efficiency and low costs. However, this definition of operating expenses does not include all the costs related to the CPP. The total cost of running the CPP has grown from $0.6 billion (0.54% of assets) to $2.0 billion (1.15%) over the last seven years. Of the $2.0 billion of total costs involved in the CPP last year, almost one-third ($0.6 billion) were incurred by the federal government, a cost not explicitly included in the CPPIB accounting statements.

External management fees, which have risen from $25 million to $782 million in six years, and the transaction costs of executing the CPPIB’s investment strategy are nearly twice as large as its operating expenses. The investment strategy of the CPP now costs nearly as much as all its operating expenses, including the government’s collection of all contributions and paying of benefits.

The CPPIB needs to be more transparent about the expense of designing and implementing its investment strategy; every dollar spent on behalf of the CPP is one less dollar available to beneficiaries. As well, a full accounting of all CPP costs, including those incurred by the Government of Canada, is necessary.