5 Expenses

The Canadian plan is much smaller than the U.S. plan which makes comparing expenses a challenge. It is clear from the annual report that the Canadians are making constant efforts to improve their spending. Of particular note: the Canadian plan recently moved to reduce their rent expense. Relocation for cheaper rent is a frequent recommendation by friends of the U.S. plan.

In 2016, the Canadian plan spent $273.73 USD per participant, compared to $503.57 USD paid by the U.S. plan. The U.S. expenditures were 84% more per participant than the Canadian plan. Included in the U.S. expense are the $28 of PBGC premiums. The view in Canada is that, due to tighter regulation, Canada’s pension plans are much less likely to fail and so a PBGC-like safety net is not required.

While we acknowledge the greater complexity of the U.S. plan over Canada’s, we think an 84% expense differential suggests that there is plenty of room for improvement in the U.S. plan’s cost control.