Are pension plans expensive?
Pensions in Canada are among the lowest cost retirement options available. A recent study by the C.D. Howe Institute found that the median cost of a pension plan was just 1.07% of assets. This is far lower than the fees charged by many other retirement savings options, such as mutual funds.
There are a number of reasons why pension plans are so affordable. One is that they are large, which gives them economies of scale. They also tend to be very efficient, with low overhead costs.
Another reason pension plans are so affordable is that they are heavily regulated. For example, the government requires that all pension plans have a solvency test to ensure that they can pay out benefits if there is a downturn in the economy. This protects Canadians from having their pensions cut if their employer goes bankrupt.
Overall, pension plans are an affordable way to save for retirement. They are heavily regulated to protect Canadians, and they offer a low-cost way to save for the future.
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