Retirement plan fees can be difficult for employees to understand, even when the information is already available in plan documents or account statements.
A workplace retirement plan may involve investment-management fees, fund operating expenses, recordkeeping costs, service-provider fees, account charges, or transaction-related costs. The challenge is that employees may see these numbers without understanding what they cover, who pays them, or how they may affect long-term savings.
For Canadian employers, the goal should not be to describe a plan simply as “low cost” or “high value.” A stronger approach is to explain retirement plan fees clearly, connect applicable costs to the services employees receive, show where current fee information can be found, and help employees understand that fees are one factor among several when evaluating retirement-plan investments.Employers can strengthen this process by incorporating fee reviews into their broader retirement plan governance framework, including provider oversight, documentation, communication, and periodic review.
Quick Answer: What Should Employees Know About Retirement Plan Fees?
Canadian employers can explain retirement plan fees more clearly by identifying the fees that apply, explaining who pays them, connecting costs to the services provided, showing how fees may affect savings over time, and directing employees to current plan-specific information.
Employers should use plain language, avoid unsupported “lowest cost” or “best value” claims, and provide access to qualified support when employees have individual investment or retirement questions.
What Types of Retirement Plan Fees May Employees See?
Not every workplace retirement arrangement has the same fee structure.
Depending on the plan and available investment options, employees may encounter:
- Investment-management fees
- Fund operating expenses
- Account fees
- Trustee or custody fees
- Recordkeeping fees
- Service-provider expenses
- Transfer or transaction charges
- Fees for certain optional services, tools, or advice
Employers should therefore avoid using a generic fee list as though it applies identically to every employee.
Current plan documents and provider materials should determine which retirement plan fees actually apply.
This distinction matters because transparency is not simply about providing more numbers. It is about helping employees understand the numbers that are relevant to their own workplace plan.
7 Smart Ways to Explain Retirement Plan Fees Clearly
1. Use Plain Language Instead of Fee Jargon
Retirement-plan terminology can become technical very quickly.
Employees may see terms such as:
- Investment-management fee
- Operating expense
- Asset-based fee
- Service-provider fee
- Management Expense Ratio (MER)
- Recordkeeping cost
Employers can make retirement plan fees easier to understand by defining terms in short, plain-language explanations.
Instead of simply listing a technical fee, explain what the fee represents and where the employee can find the current amount.
Formal plan documents should remain authoritative, but plain-language education can help employees navigate those documents more confidently.
A simple rule works well:
Name the fee. Explain what it means. Show where to verify it.
2. Explain Who Actually Pays Each Cost
Employees may assume that every plan-related expense comes directly from their account.
That may not be the case.
Depending on the arrangement, some costs may be:
- Paid by the employer
- Charged directly to employee accounts
- Reflected through investment expenses
- Shared in another way under the plan structure
A strong explanation of retirement plan fees should therefore answer a practical employee question:
“Am I paying this, is my employer paying it, or is it reflected somewhere else in the plan?”
Employees should also be shown where they can review the current fee amounts.
This provides greater clarity about how plan costs are allocated without oversimplifying the arrangement.
3. Connect Fees to the Services They Support
A fee is easier to understand when employees know what is associated with it.
Depending on the workplace plan, applicable fees may support services such as:
- Investment management
- Plan administration
- Recordkeeping
- Account statements
- Online account access
- Employee education
- Decision-making tools
- Member support
- Governance-related services
- Other plan features
CAPSA specifically recommends that fee information include descriptions of the services provided for applicable fees and expenses.
This is an important distinction.
The question should not be only:
“How much does this cost?”
Employees may also reasonably want to understand:
“What am I receiving in connection with that cost?”
Connecting retirement plan fees with services can create a more complete picture of the workplace retirement arrangement.
4. Explain the Potential Long-Term Impact of Fees
Fees and expenses reduce investment returns and may affect account balances over time.
That does not mean employers should create fear around fees or suggest that the lowest-fee investment must automatically be the best choice.
Instead, employees can be shown that fees are one consideration alongside:
- Investment objectives
- Risk
- Diversification
- Expected return
- Investment strategy
- Available services
- Individual circumstances
Where appropriate, employers may use approved illustrations or tools to demonstrate how retirement plan fees can affect long-term account balances.
Any illustration should make clear that projected outcomes are not guaranteed.
The purpose is education—not investment recommendation.
5. Make Fee Information Easy to Find More Than Once
Fee disclosure should not disappear after enrolment.
Employees may receive information when joining the plan, but many will not remember every detail months or years later.
Fee information can be reinforced through:
- Plan booklets
- Member portals
- Annual statements
- Benefit reviews
- Employee education
- Provider materials
- Significant plan-change communication
- Financial-wellness resources
CAPSA’s guidance recommends providing fee and expense information when a capital accumulation plan is introduced, when material changes occur, and at least annually thereafter.
Ongoing communication makes retirement plan fees easier to revisit when an employee actually needs the information.
6. Avoid Unsupported “Cheapest” or “Best Value” Claims
This is one of the most important communication safeguards.
Employers should be cautious with statements such as:
- “This is the cheapest plan.”
- “Lower fees mean better investment results.”
- “This plan gives you better value than other plans.”
- “These fees will produce better retirement outcomes.”
The Q&A source specifically warns against these types of statements unless they can be appropriately substantiated and accurately communicated in context.
A safer and more useful approach is:
Explain what employees pay, what services are associated with those costs, and where current information can be reviewed.
Lower fees can be important, but cost alone does not necessarily determine whether a retirement arrangement provides appropriate value.
7. Provide a Contact Point and Review Fees Regularly
Employees should know where to go when they have questions about:
- Fees
- Statements
- Investment options
- Plan documents
- Account information
Employers should also review member-borne fees, provider arrangements, investment options, and associated services periodically as part of broader retirement plan governance.
The employer review and employee communication processes should reinforce each other.
If employees repeatedly ask the same fee question, that may indicate that communication needs improvement.
If a provider arrangement changes, employee information may also need updating.
Clear retirement plan fees communication should therefore be treated as an ongoing process rather than a one-time disclosure exercise.
Why “Low Cost” Is Not the Same as “Good Value”
Cost matters.
But cost is not the only consideration.
A retirement plan may also provide:
- Investment choices
- Administration
- Digital tools
- Member education
- Account support
- Recordkeeping
- Financial-wellness resources
- Other services
CAPSA recommends that plan sponsors periodically consider whether member-borne fees are reasonable and competitive and whether they provide value to members, including factors such as net investment return and services.
This means employees benefit from seeing cost and service together.
A more balanced question is therefore:
“What does the plan cost, what services are included, and how do those costs fit within the overall retirement arrangement?”
That is more useful than reducing the conversation to “cheap” versus “expensive.”
How Can Employers Keep Fee Information Accurate and Reliable?
Fee communication should be grounded in current information.
Employers can strengthen accuracy by:
- Using current plan documents
- Using current provider materials
- Verifying fee terminology before publishing
- Avoiding unsupported comparisons
- Updating information when plan arrangements change
- Distinguishing facts from promotional language
- Making formal plan documents easy to locate
- Providing a clear contact for follow-up questions
For federally regulated defined contribution pension plans, OSFI also emphasizes that disclosure should be timely, understandable, and accurate and specifically identifies investment-management, account, and service-provider fees among information that should be disclosed to members.
Requirements can differ by plan structure and jurisdiction, so employers should not assume that the same disclosure rules apply identically to every workplace retirement arrangement.
What Questions Should Employees Be Able to Answer?
After reading fee information, an employee should ideally be able to answer:
What fees apply to my plan?
The employee should know where the current plan-specific fee information is located.
Which costs come from my account?
Communication should distinguish employee-borne fees from costs paid by the employer or handled through other parts of the arrangement.
What services are associated with the fees?
Employees should be able to understand whether fees relate to investment management, administration, recordkeeping, member education, tools, or other services.
Can fees affect my retirement savings?
Yes. Fees reduce investment returns and may affect long-term balances, although fees should be considered alongside risk, diversification, investment objectives, return expectations, and available services.
Who can answer my questions?
Every communication should provide a clear contact point for questions about fees, investment options, statements, and plan documentation.
Why Clear Fee Communication Matters to Employers
Better fee communication may help employees understand how their workplace retirement plan operates and how costs interact with investments.
It can also support stronger employer governance by creating a reason to periodically review:
- Member-borne fees
- Services
- Providers
- Investment options
- Communication materials
However, clearer retirement plan fees communication should not be presented as guaranteeing higher participation, better investment performance, greater employee trust, increased engagement, or improved retirement outcomes.
Employee responses can differ based on financial circumstances, plan design, financial literacy, investment choices, and other factors.
Transparency is valuable because it improves access to information—not because it guarantees a specific result.
How Can Employees Compare Cost and Value More Thoughtfully?
Employees should not necessarily make investment decisions based on one number.
For example, a fee may need to be considered together with:
- Fund objective
- Risk level
- Diversification
- Investment management
- Services
- Net return
- Available support
The Financial Consumer Agency of Canada also notes that management fees reduce investment returns and that even relatively small fee differences can affect investment value over time.
A workplace education program can explain these relationships without telling an individual employee which option to select.
This keeps retirement plan fees education informative without crossing into personalized investment advice.
Important Boundaries for Employers
Fee-disclosure requirements may vary depending on:
- Type of retirement arrangement
- Province or jurisdiction
- Federal or provincial regulation
- Investment products
- Provider contracts
- Pension requirements
- Securities requirements
- Insurance requirements
- Tax considerations
Employers should rely on current plan and provider materials and obtain appropriate retirement-plan, legal, investment, tax, or compliance guidance where necessary.
Employees who need advice about whether a particular fee structure, investment option, or retirement strategy is appropriate for them should be directed to appropriately qualified professionals.
Need Help Making Retirement Plan Fees Easier to Understand?
Clear retirement-plan communication can help employees understand what they pay, what services are associated with those costs, and where they can find current information.
Open Access Limited may support employers with plan-specific fee information, enrolment resources, member materials, financial-wellness education, and support channels relating to eligible group retirement-plan members.
Because fee structures and plan terms may differ, current plan-specific materials should always govern rather than broad statements about fees.
Open Access Limited
302 Bay Street, Suite 503-01
Toronto, ON M5H 0B6, Canada
Toll-Free: 1-866-625-4777
General: 416-364-8877
Fax: 416-955-4878
Email: inquiry@OpenAccessLtd.com
Website: www.OpenAccessLtd.com
Frequently Asked Questions About Retirement Plan Fees
Are Retirement Plan Fees Always the Same?
No. Fee structures can vary depending on the plan, investment options, providers, services, and applicable arrangements.
Do Lower Retirement Plan Fees Always Mean Better Results?
No. Lower fees do not guarantee better investment or retirement outcomes. Fees should be considered alongside investment objectives, risk, diversification, expected returns, and available services.
How Often Should Employees Receive Fee Information?
For capital accumulation plans, CAPSA recommends fee and expense information at plan introduction, when material changes occur, and at least annually thereafter.
Should Employers Compare Their Plan With Competitors?
Employers should avoid unsupported claims such as being the “cheapest” or providing “better value.” Comparisons should be appropriately supported and communicated in context.
Where Should Employees Look for Current Fee Information?
Employees should use current plan-specific documents, statements, member portals, and approved provider information.
Final Thoughts
Retirement plan fees should not feel like unexplained numbers buried inside an account statement.
Employers can make fee information more useful by explaining what costs apply, who pays them, what services they support, how they may affect long-term savings, and where employees can find current information.
The strongest approach is straightforward:
Explain clearly. Show the services. Avoid unsupported claims. Keep information current. Provide human support.
That creates a more transparent retirement-plan experience while keeping education separate from individualized financial advice.
References
- Canadian Association of Pension Supervisory Authorities — Guideline No. 3: Guideline for Capital Accumulation Plans
- Office of the Superintendent of Financial Institutions — Disclosure Requirements for Defined Contribution Pension Plans
- Office of the Superintendent of Financial Institutions — InfoPensions, Issue 34
- Financial Consumer Agency of Canada — Employer Pension Plans
- Open Access Limited — Current Group Retirement Plan and Plan-Specific Member Materials
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