It's matching, but not "free money" as it is part of overall compensation. I get a lower base for 12% pension..it is a lot of wasting opportunity cost and not to mention management fee.

So your options are:

a) opt out of the pension and make 12% less

b) find employment that pays more with/without a pension/RRSP match

Typically, and depending on the size of your company, the organization will cover the pension costs (ongoing management, scheduled trades, etc.) and you pay a small(er) MER on the funds when compared to index mutual funds (and maybe ETFs if your company balls out) since the pension is making a management fee from the company as well.