Study shows Canadian pension plans spend over four times more per member than those in the UK
Canada records the highest pension administration cost among four major countries analysed in a new global study by CEM Benchmarking, cited by The Canadian Press.
According to the study titled “The Impact of Service Models on Pension Administration Costs: A Global Perspective”, median costs per member in Canada reached $152, more than double those in the US at $66 and over four times the £34 in the UK. The Netherlands posted a median cost of €68.
CEM’s research identified six major factors that influence regional cost differences: currency, purchasing power, membership composition, local cost of living, economies of scale, and pension maturity.
Adjusting for these, the study found that only 50 percent of the variation in member-level pension administration costs could be explained by these factors.
Even after accounting for these variables, the average pension system outside the UK was found to cost twice as much as those within the UK.
The study noted that in the UK, the cost of servicing active and retired members is about the same, while outside the UK, including in Canada, administrators typically spend slightly more on retired members.
The report highlighted that Canada follows a “high-cost / high-touch” service model.
This approach involves heavy investment in member-facing services, including contact centres and one-on-one counselling.
The Netherlands follows a similar model, whereas the UK operates under a “low-cost / self-serve” model, focusing mainly on essential activities while minimizing spending on IT and staff support.
The US features a hybrid model: large urban centres adopt the “high-cost / high-touch” model, while other areas use the “low-cost / self-serve” approach.
CEM’s analysis also examined costs across specific pension administration functions, including contact centres, transactions and interactions, finance and audit, governance, major projects, IT, and staff support.
Variations in these activity-level costs were reflected in the quality and capabilities of services. For example, the Netherlands invests heavily in contact centres and governance.
“We believe CEM has broken ground with this research,” said Rashay Jethalal, CEO of CEM Benchmarking.
He noted that for the first time, pension systems across four countries can be compared on a comprehensive, like-for-like basis.
The analysis highlights how strategic choices differ among pension leaders and how these choices affect services and costs.
Jethalal said some countries show a greater willingness to pay for higher service, while others focus on total-plan cost efficiency—both of which, he added, have their merits.
