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Canada Pension Plan’s money managers worth more than they cost, PBO says

OTTAWA — The parliamentary budget officer says having the money in the Canada Pension Plan fund actively managed by investment experts has been worth nearly $50 billion in extra returns since the mid-2000s.

In a report Monday, the PBO compares the growth in the $392-billion public pension fund to what the same money would have made in “passive” investments that just tracked a pair of index funds.

Passive investments have almost no expenses because there’s very little buying, selling or research involved in managing them.

Some personal-finance experts say passive investments are good for most people’s retirement savings because professional money-managers don’t add enough extra value to make up for what they cost in higher fees.

But according to the PBO, even when all the extra costs of active management of the Canada Pension Plan fund are accounted for, its experts’ wheelings and dealings are worth an extra 1.2 per cent in investment returns in an average year.

A similar analysis of the pension fund for federal workers found that its managers weren’t as successful, but still performed slightly better than passive investments would have over the last decade or so.

The Canadian Press

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