The Balanced Fund is the CSS Pension Plan's default investment fund. The primary purpose of the Balanced Fund is to provide moderate long-term growth with managed volatility. CSS is initiating Real Asset investments to help provide additional inflation sensitivity, diversification and expected improvements in risk-adjusted returns for members invested in the Balanced Fund.
CSS initiated its first Real Asset investment in 2016 with the Greystone Canadian Real Estate Fund.
In 2022, CSS made commitments to further expand its Real Asset portfolio to include global real estate and global infrastructure with four new investment mandates.
After a comprehensive due diligence process, JP Morgan IIF and IFM Global Infrastructure Fund were selected as the Plan’s global infrastructure managers, and TD Greystone Global Real Estate Fund and UBS GREF were selected as the Plan’s global real estate managers.
The Real Asset component of the Balanced Fund will represent a target allocation of 20% of the Balanced Fund when funding is complete.
From time to time, we receive inquiries from our members about various facets of their CSS Pension Plan, such as the management expense ratio (MER) - or fees - needed to offer our investment funds.
Today, consistent with our historic practices, CSS considers low fees to be one of the most important elements of our overall value proposition. The overall value CSS generates for our members, however, goes beyond just competitive cost.
The MER on CSS’ Balanced Fund (0.52%) is an “all in” measure. It includes all costs associated with our external asset managers investing and managing our members’ assets, all costs to provide the tools, education, information, access to retirement planners, and all administration and governance costs to run the pension plan, and all regulatory and compliance costs to run the pension plan.
Our MER is where it should be. The fact that it is higher today than it has been in the past is not a sign that CSS has lost its focus on the importance of fees to our members’ financial security in retirement; quite the contrary. While CSS has incurred a small uptick in expenses related to digital transformation activities to modernize our systems, processes and workflows to future-proof our pension plan, the increase in MER we’ve seen in recent years reflects CSS taking advantage of investment opportunities in the marketplace that are expected to improve the risk-return profile of our investments for all members for the very long term.
For more information on MERs and value for money, see this related article.