Government of Canada
Symbol of the Government of Canada

Office of the
Chief Actuary

Staff image Jean-Claude Ménard
Chief Actuary
Photo: Jean-Claude Ménard, Chief Actuary

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 provides statutory actuarial valuation and advisory services for the CPP, Old Age Security program, the Canada Student Loans Program, Employment Insurance program, 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 content and actuarial opinions in reports prepared by the OCA.

Tabling of the 12th Actuarial Report on the Old Age Security Program

The OCA is required by law to produce an actuarial report on the Old Age Security (OAS) program every three years or whenever an amendment is made that affects the cost of benefits. The triennial 12th Actuarial Report on the OAS Program as at 31 December 2012 was tabled on August 20, 2014. This actuarial report provides information on future expenditures until 2060. The report facilitates a better understanding of the status of the OAS program and the factors that influence its costs, thereby contributing to an informed public discussion of issues related to it.

The OAS program, financed through Government of Canada general tax revenues, is one of the cornerstones of Canada’s retirement income system. Benefits include the basic OAS pension, the Guaranteed Income Supplement (GIS) and the Allowance. The basic pension is a monthly benefit available to most Canadians who meet age and residence requirements. The age of eligibility for OAS benefits is currently 65 but is scheduled to increase gradually to 67 by January 2029. The GIS and the Allowance are monthly benefits paid to residents of Canada who receive a basic, full or partial OAS pension and have little or no other income.

In 2014, about 5.5 million Canadians received OAS benefits, with a total value of approximately $44 billion or 2.2% of Canada’s Gross Domestic Product (GDP). The report’s key findings show that, over the long term, the ratio of total OAS expenditures to GDP is projected to reach a high of 2.8% by 2033 and then decrease slowly to a level of 2.4% by 2050.

External Peer Review of the 26th CPP Actuarial Report

The OCA is continually working to strengthen its technical expertise, as well as internal and external communications. External peer reviews of CPP actuarial reports and their ensuing recommendations have helped the OCA achieve these objectives and ensure that the OCA continues to provide a valuable service with tangible benefits to Canadians.

The OCA released, in May 2014, the findings of an external peer panel commissioned to review the 26th Actuarial Report on the Canada Pension Plan. Key findings were reported in the 2013-2014 OSFI Annual Report and the complete review is available in the Office of the Chief Actuary section of the OSFI website.

The peer review resulted in eight recommendations dealing with various aspects of the report including data, methodology, communication of results, and other actuarial issues. The OCA has either taken or plans to take action on these recommendations. In particular, the OCA will continue to broaden its sources of information before setting assumptions. The work performed by the Chief Actuary as Chairman of the International Social Security Association (ISSA) Commission on Statistical, Actuarial and Financial Studies, as well as the OCA inter-disciplinary seminar planned for September 2015, are aimed at gathering opinions from national and international experts. The OCA will also continue to obtain expert advice from various fields such as demographics, economics, statistics and investments.

To further increase the transparency and independence of the peer review process, an external party was responsible for the oversight of the review. The United Kingdom’s Government Actuary’s Department (GAD) selected the peer review panel members and released an opinion in May 2014 on the work performed by the external panel. The GAD opinion noted that the work carried out for the review and the review report adequately addresses the issues set out in the terms of reference and that the three reviewers were able to reach agreement on all of the opinions and recommendations set out in the review report. (The GAD opinion is also available on the OSFI website.)

Public Sector Insurance and Pension Plans

In 2014-2015, the OCA completed four actuarial reports with respect to public sector insurance and pension plans, which were submitted to the President of the Treasury Board for tabling before Parliament. The Actuarial Report on the Pension Plan for the Members of Parliament as at March 31, 2013 and the Actuarial Report on the Regular Force Death Benefit Account as at March 31, 2013 were tabled on October 31, 2014, and the Actuarial Reports on the Pension Plans for the Canadian Forces – Regular Force and Reserve Force as at March 31, 2013 were both tabled on November 21, 2014. These reports provide actuarial information to decision makers, Parliamentarians and the public, thereby increasing transparency and confidence in Canada’s retirement income system.

Actuarial Report on the Employment Insurance Premium Rate

In 2014-2015, the OCA presented to the Canada Employment Insurance Commission the 2015 Actuarial Report on the Employment Insurance Premium Rate that was tabled before Parliament on September 24, 2014. This report provides the forecast break-even premium rate for the upcoming year and a detailed analysis in support of this forecast.

Special Events, Presentations and Special Studies

Increasing longevity affects the sustainability of pension plans. The impact of this trend, coupled with high uncertainty with respect to the evolution of future mortality rates, makes the development of appropriate mortality assumptions of paramount importance. As stated by Chief Actuary Jean-Claude Ménard during his appearance at the House of Commons Standing Committee on Public Accounts in May 2014, the expected future mortality improvements are embedded in actuarial valuations of the pension plans prepared by the OCA. If the future improvements in mortality were not taken into account, the total actuarial liability of the three largest public sector pension plans (public service, Canadian Forces and RCMP) as at 31 March 2013 would be reduced by $7.7 billion or 3.4%.

In 2014-2015, the OCA published two mortality studies that address mortality assumptions. Actuarial study No. 12 Mortality Projections for Social Security Programs in Canada explored trends in Canadian population mortality and discussed mortality assumptions developed for the latest CPP and OAS Actuarial Reports. The findings of this study were presented to various national and international audiences, including by Chief Actuary Jean-Claude Ménard at the Society of Actuaries’ Annual Meeting. Actuarial study No. 14 Pension Plan for the Public Service of Canada Mortality Study was produced in response to the development by the Canadian Institute of Actuaries of mortality tables based on the experience of Canadian pensioners. The OCA study found that life expectancies of federal public servants are similar to those of members of private sector pension plans.

For a complete list of studies, meetings, presentations and speeches, see the Office of the Chief Actuary section of OSFI’s website.