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Office of the Chief Actuary

Jean-Claude Ménard, Chief Actuary

Jean-Claude Ménard was appointed Chief Actuary in August 1999. Prior to joining OSFI, Mr. Ménard held progressively senior roles with the Quebec Pension Board, culminating in his appointment as Chief Actuary and Director of Valuation in 1995. From 2002 to 2007, he was Vice-Chairman of the Technical Commission on Statistical, Actuarial and Financial Studies of the International Social Security Association (ISSA). In 2008, he became Chairman of that Commission. In this capacity, he is the official representative of the ISSA and the Canadian Institute of Actuaries on the Social Security Committee of the International Actuarial Association. In February 2008, he was appointed as a member of the National Academy of Social Insurance (NASI), a non-profit organization made up of the leading experts on social insurance.

The Office of the Chief Actuary (OCA) contributes to a financially sound and sustainable Canadian public retirement income system through the provision of expert actuarial valuation and advice to the Government of Canada and to provincial governments that are Canada Pension Plan (CPP) stakeholders.

The OCA conducts statutory actuarial valuations of the CPP, Old Age Security (OAS) program, the Canada Student Loans Program (CSLP), and pension and benefits plans covering the federal Public Service, the Canadian Forces, the Royal Canadian Mounted Police (RCMP), federally appointed judges, and Members of Parliament.

The OCA was established within OSFI as an independent unit. The Chief Actuary reports to the Superintendent, however the accountability framework of the OCA makes it clear that the Chief Actuary is solely responsible for the content and actuarial opinions in reports prepared by the OCA.

24th Actuarial Report on the Canada Pension Plan

The OCA supported the federal-provincial CPP committee’s triennial financial review, which was completed in May 2009. Bill C-51 — Economic Recovery Act was introduced before the House of Commons in the fall of 2009 following the completion of the review. Part 2 of this bill contained changes to the CPP recommended by the federal and provincial ministers of finance.

As required by the legislation, the Chief Actuary prepared the 24th Actuarial Report on the CPP (PDF Version, 167kb), as a supplement to the 23rd Actuarial Report on the CPP as at 31 December 2006, to show the effects of Part 2 of Bill C-51 on the long-term financial status of the CPP.

Bill C-51 received Royal Assent in December 2009 and is expected to become law in January 2011. The proposed changes comprise removing the work cessation test in 2012 (which requires individuals who apply to take their CPP retirement benefit prior to age 65 either to stop working or materially reduce their earnings); increasing the general drop-out provision from 15% to 16% in 2012 and to 17% in 2014; requiring working beneficiaries aged less than 65 to contribute with their pensions recalculated and making contributing optional for working beneficiaries aged 65 and older; restoring the actuarial adjustment factors to their approximate fair levels, and other technical changes. The ministers of finance indicated that the proposed changes are intended to provide greater flexibility for older workers to combine pension and work income if they so wish, modestly expand pension coverage, and improve fairness in the Plan’s flexible retirement provisions.

The 24th CPP Actuarial Report reflects the financial and economic turmoil countries were exposed to at the time of its preparation, thereby providing Canadians with a more objective picture. The report finds that the legislated 9.9% combined employer-employee contribution rate is expected to be sufficient to sustain the CPP over the next 75 years.

Canada Student Loans Program Actuarial Review

The first statutory Actuarial Report on the Canada Student Loans Program as at 31 July 2008 (PDF Version, 779kb) was tabled before Parliament on June 8, 2009 in accordance with the Budget Implementation Act, 2009, which deems the annual CSLP reports as statutory. The previous CSLP reports were provided to ministers and released to the public.

The report presents the results of an actuarial review of the CSLP as at July 31, 2008 and includes projections of future costs of the program through to the loan year 2032–2033. An actuarial review of the CSLP is prepared in order to provide an evaluation of the program’s overall financial costs and increase the level of information available to Parliament and the public.

To better monitor and understand emerging risks with respect to Public Sector Pension Plans, the OCA is integrating Asset Liability Modelling into various actuarial projects.

Public Sector Insurance and Pension Plans

The OCA completed and provided to the President of the Treasury Board for tabling before Parliament six actuarial reports in 2009–2010 with respect to the public sector insurance and pension plans, including actuarial reports as at March 31, 2008 on the pension plans for the Public Service, the RCMP and the Regular and Reserve Canadian Forces, as well as the Public Service Death Benefit Account and the Regular Force Death Benefit Account. For the first time, the actuarial report on the Canadian Forces included provisions introduced March 1, 2007 regarding the Reserve Force pension plan. These reports provide actuarial information to decision makers, Parliamentarians and the public, thereby increasing transparency and confidence in the retirement income system. The results of these reports were presented by the Chief Actuary and his staff to the Joint Meeting of the Public Service, RCMP and Canadian Forces Pension Advisory committees, as well as at the 2009 Federal-Provincial Pensions Conference.

To better monitor and understand emerging risks with respect to Public Sector Pension Plans, the OCA is integrating Asset Liability Modelling (ALM) into various actuarial projects. The ALM is a financial management tool that allows the projection of assets and liabilities under a range of different possible economic scenarios. The use of ALM provides the OCA with the ability to analyze one of the major risks that Public Sector Pension Plans are exposed to — that the assets will not match the liabilities. If funding deficiencies or surpluses were to continue for an extended period of time, the risk of contribution or benefit adjustments would increase.