Betermier says it’s a difficult to do a proper comparative analysis because there are not too many funds the size of CPP. However, “in general, there is consensus that larger funds do better.
“They are able not only to generate economies of scale on the benefits administration, but also on the investments. You have more capabilities when you are larger, you can do more in-house investments, which is something the Canadian funds are fairly specialized in doing and do quite well. You also have greater leverage in speaking with third party providers and access to better external managers.”
However, Betermier points out that Alberta is one of the largest provinces in Canada, so it would automatically have scale. “So, in that sense, this is not necessarily the one point where I would be the most concerned.”
The greatest threat, says Betermier, “is if, ultimately, the provinces do not deem the capital allocation to be fair and then other provinces jump on the bandwagon and also potentially try to secede, then we lose agreement consensus among the provinces. This could lead to the demise of the CPP in its entirety.
“That would be, in my view, a very bad scenario because we have, through the coordination of the provinces, a great system and one that Canadian should be proud of.
