Many proponents of Canada Pension Plan (CPP) reform call for its mandatory expansion, while others have made the case for alternatives. This study examines CPP expansion from an economies-of-scale perspective to assess the potential impact of expansion on the Canada Pension Plan Investment Board's (CPPIB's) performance in managing costs and generating returns.

The empirical literature reviewed in this study found that fund managers generally experience diseconomies of scale at some point in generating investment returns as their asset base increases, although relatively large pension plans can take action to offset these diseconomies.

The study concludes that diseconomies of scale present a risk to the CPPIB's investment performance. The actions that the CPPIB is taking to offset diseconomies of scale in investment returns will likely become less effective as its assets continue to grow. Even modest expansion of the CPPIB will increase the risk that the CPPIB will not meet its objectives in helping the CPP fund Canadian retirement incomes.