Section II: Analysis of Programs by Strategic Outcome

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Strategic Outcome One: A safe and sound Canadian financial system.

Program 1.1: Regulation and Supervision of Federally Regulated Financial Institutions

Description:

This program involves regulating and supervising federally regulated financial institutions (FRFIs) to determine whether they are in sound financial condition and are complying with their governing statute law and supervisory requirements; monitoring the financial and economic environment to identify issues that may impact these institutions negatively; and intervening in a timely manner to protect depositors and policyholders from undue loss, while recognizing that management and boards of directors are ultimately responsible, and that financial institutions can fail.

Costs for this program are recovered through base assessments and user fees and charges paid by the federally regulated financial institutions covered under the Bank Act, Trust and Loan Companies Act, Insurance Companies Act and Cooperative Credit Associations Act. The Office of the Superintendent of Financial Institutions also receives revenues for cost-recovered services to provinces, for which it provides supervision of their institutions on a fee for service basis.

Budgetary Financial Resources (dollars)
2014-15
Main Estimates
2014-15
Planned Spending
2015-16
Planned Spending
2016-17
Planned Spending
77,788,097 77,788,097 79,909,307 82,886,559

Human Resources (FTEs)
2014-15 2015-16 2016-17
413 412 412

Performance Measurement
Expected Results Performance Indicators Targets Date to be Achieved
Protect depositors and policy holders while recognizing that all failures cannot be prevented. Estimated Recoveries on Failed Institutions (percentage recovered per dollar of claim). 90% March 31, 2015
Percentage of institutions with a Composite Risk Rating of low or moderate. 80% March 31, 2015
OSFI’s regulatory and supervisory framework is consistent with international standards. OSFI’s regulatory and supervisory framework is deemed consistent with international standards. 100% March 31, 2015

Planning Highlights

As outlined in the organizational priorities section of this report, the overall focus for this program continues to be anticipating and responding to economic and financial system risks and risks emanating from international and domestic regulatory reform. In responding to changes related to these risks, OSFI will continue to evolve and enhance its supervisory practices while ensuring an effective regulatory framework is in place which focuses on protecting depositors and policy holders.

OSFI will also be responding to any recommendations stemming from the 2013 International Monetary Fund’s Financial Sector Assessment for Canada.

Sub-Program 1.1.1: Risk Assessment and Intervention

Description:

OSFI regulates and supervises financial institutions to determine whether they are in sound financial condition and are complying with their governing statute law and supervisory requirements. This program involves the administration and application of an effective supervisory process to assess the safety and soundness of regulated financial institutions by evaluating an institution’s risk profile, financial condition, risk management processes, and compliance with applicable laws and regulations. This program includes activities to monitor and supervise financial institutions; monitor the financial and economic environment to identify emerging issues; and intervene on a timely basis when a financial institution’s business practices may be imprudent or unsafe, by exercising supervisory powers to take, or require management or boards to take, necessary corrective measures as rapidly as possible to protect depositors and policy holders, while recognizing that all failures cannot be prevented.

Budgetary Financial Resources (dollars)
2014-15
Planned Spending
2015-16
Planned Spending
2016-17
Planned Spending
55,287,655 56,750,111 58,864,501

Human Resources (FTEs)
2014-15 2015-16 2016-17
282 281 281

Performance Measurement
Expected Results Performance Indicators Targets Date to be Achieved
Issues in institutions are identified and acted on at an early stage. Percentage of supervisory rating increases that are two or more levels within any rolling three month period. 20% March 31, 2015
Percentage of supervisory letters that are issued within established standards. 80% March 31, 2015

Planning Highlights

For this sub-program, OSFI will focus on enhancing its supervisory processes through the following activities:

  • Review OSFI intervention processes at FRFIs to ensure more timely response to OSFI’s expectations.
  • For large complex FRFIs in particular, focus on new supervisory areas such as assessing risk culture, and implementation of risk appetite.
  • Ensuring OSFI’s supervisory practices are appropriate to the size and complexity of smaller FRFIs, including foreign branches and subsidiaries.
  • Continuing OSFI’s evolution of its Supervisory methodology and practices.
  • Conducting stress-testing for adverse scenarios and emerging risks, including risks to highly indebted consumers, shocks to interest rate, currency and equity markets, as well as a long period of low interest rates.
  • Assessing operational risk, particularly in the area of cyber risk.
  • Promoting improved risk management practices in FRFIs by assessing risk culture, and the effectiveness of organizations’ risk appetite frameworks, strategic plans and internal control frameworks.

These efforts will contribute to reaching or exceeding established performance targets.

Sub-Program 1.1.2: Regulation and Guidance

Description:

This program involves advancing and administering a regulatory framework of rules and guidance that promotes the adoption by regulated financial institutions of sound risk management practices, policies and procedures designed to plan, direct and control the impact on the institution of risks arising from its operations. This program encompasses the issuance of regulations and guidance, input into federal legislation and regulations affecting financial institutions; contributions to accounting, auditing and actuarial standards; and involvement in a number of international regulatory activities.

Budgetary Financial Resources (dollars)
2014-15
Planned Spending
2015-16
Planned Spending
2016-17
Planned Spending
16,353,979 16,816,425 17,442,969

Human Resources (FTEs)
2014-15 2015-16 2016-17
101 101 101

Performance Measurement
Expected Results Performance Indicators Targets Date to be Achieved
Timely response to market changes and/or industry suggestions that guidance need updating. Percentage of industry stakeholders who rate OSFI as good or very good at responding in a timely manner to market changes or to industry suggestions that guidance need updating. 75% March 31, 2015
Guidance effectively communicates OSFI’s expectations. Percentage of industry stakeholders that rate OSFI’s guidance as somewhat or very effectively indicating OSFI’s expectations. 75% March 31, 2015
Industry is consulted on the development of guidance. Percentage of industry stakeholders that rate OSFI as good or very good at consulting with industry on the development of guidance. 70% March 31, 2015

Planning Highlights

The focus of this sub-program continues to be ensuring that OSFI’s regulatory framework remains effective and responsive by undertaking appropriate adjustments to align with international and domestic developments in the following areas:

Banking:
  • Implementing Basel reforms and monitoring the implementation of banking reforms in other jurisdictions, as well as monitoring the bank responses to global regulatory reforms and adjust, as appropriate, supervisory or regulatory requirements.
  • Supporting FISC partner agencies in establishing a sound resolution framework for major banks and life insurers in Canada.
  • Issuing a Liquidity Adequacy Requirements Guideline, updating the Derivatives Best Practices Guideline, and developing new guidance in the areas of operational risk and business continuity management.
Insurance:
  • Implementing the suite of domestic reforms set out in the Life Insurance Regulatory Framework publication, including continuing development work on more risk sensitive standardized capital framework (Minimum Continuing Capital and Surplus Requirements (MCCSR)) for life insurers (including segregated funds).
  • Issuing the final version of a more risk sensitive Minimum Capital Test (MCT) guideline for property and casualty insurers.
  • Developing guidelines on best practices for mortgage insurance, capital for mortgage insurance companies, and updating the methodology for determining the additional capital requirement for private sector mortgage insurers.
  • Participating in the development of global insurance capital standards and monitoring the implementation of insurance reforms in other jurisdictions as well as considering appropriate Canadian responses.
Both banking and insurance:
  • Finalizing the stand alone parental capital framework.
Accounting:
  • Monitoring and participating in developments in international accounting and auditing standards to identify and ensure that any issues are addressed in FRFI prudential and disclosure requirements.
  • Supporting and monitoring the efforts of the six major Canadian banks to implement the recommendations of the Financial Stability Board’s Enhanced Disclosure Task Force.

These efforts will contribute to reaching or exceeding established performance targets.

Sub-Program 1.1.3: Approvals and Precedents

Description:

Federally regulated financial institutions are required to seek regulatory approval for certain types of transactions. This program: evaluates and processes applications for regulatory consent; establishes positions on the interpretation and application of the federal financial institutions legislation, regulations and guidance; identifies precedential transactions that may raise policy or precedent-setting issues and develops recommendations that recognize the need to allow institutions to compete effectively while undertaking reasonable risks that do not unduly impact the Office of the Superintendent of Financial Institution’s primary stakeholders, the policyholders and depositors of FRFIs.

Budgetary Financial Resources (dollars)
2014-15
Planned Spending
2015-16
Planned Spending
2016-17
Planned Spending
6,146,463 6,342,771 6,579,089

Human Resources (FTEs)
2014-15 2015-16 2016-17
30 30 30

Performance Measurement
Expected Results Performance Indicators Targets Date to be Achieved
Provide transparent and timely decisions on regulatory approvals. Percentage of industry stakeholders that understand somewhat or very well the basis upon which OSFI makes its decisions as part of the approval process. 85% March 31, 2015
Percentage of completed applications for regulatory approvals that are processed within established standards. 90% March 31, 2015

Planning Highlights

The uncertain economic climate puts pressure on many small bank business models, which will present challenges for OSFI’s review of these applications. At the same time, the federal government’s initiative to promote entry and growth of small financial institutions has the potential to lead to an increase in such applications. OSFI will monitor the impact of this initiative on its approach to new entry applications and determine if any changes may be required. In addition, OSFI will introduce a new process for approving reinsurance with unregistered related reinsurers beginning in 2014.

Program 1.2: Regulation and Supervision of Federally Regulated Private Pension Plans

Description:

This program involves regulating and supervising federally regulated private pension plans to determine whether they are meeting minimum plan funding requirements and are complying with their governing law and supervisory requirements. This program provides risk assessments of pension plans covering employees in federally regulated areas of employment; timely and effective intervention and feedback to protect the financial interests of plan members and beneficiaries from undue loss, while recognizing that plan administrators are ultimately responsible, and that plans can fail; a balanced relevant regulatory framework; and a prudentially effective and responsive approvals process. This program incorporates risk assessment and intervention, regulation and guidance, and approvals and precedents related to federally regulated private pension plans under the Pension Benefits Standards Act, 1985. The costs for this program are recovered from pension plan fees based on the number of members in each federally regulated pension plan.

Budgetary Financial Resources (dollars)
2014-15
Main Estimates
2014-15
Planned Spending
2015-16
Planned Spending
2016-17
Planned Spending
4,420,260 4,420,260 4,601,001 4,772,664

Human Resources (FTEs)
2014-15 2015-16 2016-17
27 27 27

Performance Measurement
Expected Results Performance Indicators Targets Date to be Achieved
Issues in plans are identified and acted on at an early stage. Percentage of stage rating increases that are two or more levels within any rolling three month period. 20% March 31, 2015
OSFI is perceived as being effective in monitoring and supervising pension plans. Percentage of industry stakeholders that rate OSFI as “somewhat effective” or “very effective” in monitoring and supervising their pension plan(s). 75% March 31, 2015
Guidance effectively communicates OSFI’s expectations. Percentage of industry stakeholders that rate OSFI Guidance as “somewhat effective” or “very effective” in providing an indication of OSFI’s expectations. 75% March 31, 2015

Planning Highlights

As part of anticipating and responding to risks emanating from the economy, financial system and regulatory reform, this program will focus on:

  • Continuing to develop internal processes and external guidance needed to support the implementation of Pooled Registered Pension Plans (PRPPs) as per the Pool Registered Pensions Plans Act.
  • Working with the Canadian Association of Pension Supervisory Authority’s (CAPSA) PRPP Committee to develop a coordinated supervisory approach.
  • Updating and enhancing external guidance to reflect recent changes to federal pension legislation and regulations.
  • Reviewing and considering modifications or enhancements to, pension supervision processes in the targeted areas of:
    • supervision of defined contribution pension plans; and
    • best practices for oversight of investment risk. 

These efforts will contribute to reaching or exceeding established performance targets.

Strategic Outcome Two: A financially sound and sustainable Canadian public retirement income system

Program 2.1: Actuarial Valuation and Advisory Services

Description:

The federal government and the provinces, through the Canada Pension Plan (CPP), public sector pension arrangements and other social programs have made commitments to Canadians and have taken on emanated responsibility for the financing of these commitments. Some are long-term and it is important that decision-makers, Parliamentarians and the public understand these and the inherent risks. This program plays a vital and independent role in this process. It provides checks and balances on the future costs of the different pension plans under its responsibilities.

This program provides a range of actuarial services, under legislation, to the CPP and some federal government departments. It conducts statutory actuarial valuations of the CPP, Old Age Security (OAS) and Canada Student Loans programs, 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 Office of the Chief Actuary (OCA) is funded by fees charged for its actuarial valuation and advisory services and by an annual parliamentary appropriation.

Budgetary Financial Resources (dollars)
2014-15
Main Estimates
2014-15
Planned Spending
2015-16
Planned Spending
2016-17
Planned Spending
5,231,775 5,231,775 5,423,820 5,631,855

Human Resources (FTEs)
2014-15 2015-16 2016-17
35 35 35

Performance Measurement
Expected Results Performance Indicators Targets Date to be Achieved
Stewards of Canada’s public retirement income system receive accurate, high quality and timely professional actuarial services and advice. Attestation of panel of three Canadian peer actuaries selected by an international independent body that the OCA provides accurate, high quality and professional services and advice. 100% agreement among all three members of peer review panel March 31, 2015
Use of the OCA’s work by the Office of the Auditor General (OAG) as an independent evidence for Public Accounts Canada. Confirmation from the OAG March 31, 2015
Reports are provided to the Minister for tabling in Parliament as per statutory deadlines. 100% March 31, 2015

Planning Highlights

As part of the OCA’s commitment to provide checks and balances on the future costs of the different pension plans and social programs within its scope of responsibility, the OCA will prepare several statutory reports in 2014-15.

Other projects planned include the publication of several actuarial studies as part of the implementation of recommendations from the most recent peer review. The OCA will also continue to provide expert actuarial advice and services to provincial Ministries of Finance and federal government departments such as the Treasury Board Secretariat, Employment and Social Development Canada (ESDC), Finance Canada, Department of Justice, and the Privy Council Office.

Sub-Program 2.1.1: Services to the Canada Pension Plan and Old Age Security Program

Description:

This program involves the conduct of statutory actuarial valuations of the Canada Pension Plan (CPP) and Old Age Security (OAS) Program. These valuations estimate the financial status of these plans and programs as required by legislation. This program estimates long-term expenditures, revenues and current liabilities of the Canada Pension Plan and estimates long-term future expenditures for Old Age Security programs. Pursuant to the Canada Pension Plan and the Public Pensions Reporting Act, the Office of the Chief Actuary prepares statutory triennial actuarial reports on the financial status of these programs, as required by legislation.

Budgetary Financial Resources (dollars)
2014-15
Planned Spending
2015-16
Planned Spending
2016-17
Planned Spending
1,813,723 1,914,429 1,987,858

Human Resources (FTEs)
2014-15 2015-16 2016-17
11 11 11

Performance Measurement
Expected Results Performance Indicators Targets Date to be Achieved
Provide accurate, high quality and timely actuarial valuations informing Canada Pension Plan (CPP) and Old Age Security (OAS) stakeholders and Canadians of the current and projected financial status of the Plan and Program. CPP actuarial valuations are deemed accurate and high quality 100% March 31, 2015
Percentage of recommendations from the previous peer review report and within the scope and influence of the Office of the Chief Actuary (OCA) that are implemented before the next peer review. 80% March 31, 2017
Reports on CPP and OAS are provided to the Minister for tabling in Parliament as per statutory deadlines. 100% March 31, 2015

Planning Highlights

The OCA will submit the Actuarial Report on the OAS Program as at December 31, 2012 to the Minister of Employment and Social Development Canada. This actuarial report estimates the long-term future expenditures of the OAS program which is one of the cornerstones of Canada’s retirement income system and is financed from Government of Canada general tax revenues. In 2014-15, the OCA will assist the federal, provincial and territorial ministers of Finance in their triennial review of the CPP. The OCA will also begin implementing the most recent Peer Reviewer recommendations following the review of the Actuarial Report (26th) on the Canada Pension Plan as at December 31, 2012 performed during the 2013-14 fiscal year.

In conducting actuarial valuation, the OCA will strive to meet or exceed its accuracy, quality, and timeliness performance targets.

Sub-Program 2.1.2: Services to Public Sector Pension and Insurance Programs

Description:

This program involves the conduct of statutory actuarial valuations of various federal public sector employee pension and insurance plans. These valuations estimate the financial status of these plans as required by legislation. Pursuant to the Public Pensions Reporting Act, this program involves preparing statutory triennial actuarial reports on the financial status of federal public sector employee pension and insurance plans covering the federal Public Service, the Canadian Forces, the Royal Canadian Mounted Police, the federally appointed judges and Members of Parliament. This program supports plan members, thereby serving the public interest, by ensuring good governance of the plan, appropriate disclosure in the actuarial reports and contributing to the overall accountability of the plan sponsor to members. This program also involves the provision of sound actuarial advice that assists different government departments in the design, funding and administration of these plans. As part of this program, the Chief Actuary submits the actuarial reports to the President of Treasury Board.

Budgetary Financial Resources (dollars)
2014-15
Planned Spending
2015-16
Planned Spending
2016-17
Planned Spending
2,565,065 2,642,102 2,743,442

Human Resources (FTEs)
2014-15 2015-16 2016-17
18 18 18

Performance Measurement
Expected Results Performance Indicators Targets Date to be Achieved
Provide accurate, high quality and timely actuarial valuation reports on Public Pension and Insurance Plans to departments to assist with design, funding and administration of the plans. Public Pension and Insurance Plans valuations are deemed accurate and high quality. 100% March 31, 2015
Reports on actuarial valuation of Public Pensions and Insurance Plans are provided to the President of Treasury Board for tabling in Parliament as per statutory deadlines. 100% March 31, 2015

Planning Highlights

The OCA will submit, to the President of the Treasury Board, the Actuarial Reports on the Pension Plan for the Canadian Forces (Regular Force), the Pension Plan for the Canadian Forces (Reserve Force), the Regular Force Death Benefit Account, the Pension Plan for the Public Service of Canada, the Public Service Death Benefit Account and the Benefit Plan Financed Through the Royal Canadian Mounted Police (Dependants) Pension Fund. These reports provide actuarial information to decision makers, Parliamentarians and the public, thereby increasing transparency and confidence in Canada’s retirement income system. This sub-program also involves the provision of sound actuarial advice that assists different government departments such as the Treasury Board Secretariat, Veterans Affairs Canada, National Defense, Royal Canadian Mounted Police (RCMP) and the Department of Justice in the design, funding and administration of the plans for which they are responsible.

In conducting actuarial valuation, the OCA will strive to meet or exceed its accuracy, quality, and timeliness performance targets.

Sub-Program 2.1.3: Services to the Canada Student Loans and Employment Insurance Programs

Description:

Pursuant to the Student Financial Assistance Act, as amended by the Budget Implementation Act, 2009, Employment Insurance Act, and Department of Human Resources and Skills Development Act this program involves the conduct of statutory actuarial valuations of the Canada Student Loans Program (CSLP) and performing the statutory actuarial forecasts and estimates necessary to set the Employment Insurance premium rate under Section 66 of the Employment Insurance Act. As part of this program, the actuarial reports are submitted to the minister of Human Resources and Skills Development.

Budgetary Financial Resources (dollars)
2014-15
Planned Spending
2015-16
Planned Spending
2016-17
Planned Spending
852,987 867,289 900,555

Human Resources (FTEs)
2014-15 2015-16 2016-17
6 6 6

Performance Measurement
Expected Results Performance Indicators Targets Date to be Achieved
Provide accurate, high quality and timely actuarial valuation reports on Canada Student Loans Program (CSLP) and Employment Insurance (EI) to inform stakeholders and Canadians of the future costs and rates for these programs. Use of the OCA’s actuarial valuation of the CSLP by the Office of the Auditor General (OAG) as an external audit evidence for the Public Accounts of Canada. 100% March 31, 2015
Actuarial reports on CSLP and EI programs are submitted to the Minister/Employment Insurance Commissioner for tabling in Parliament as per statutory deadlines. 100% March 31, 2015

Planning Highlights

This sub-program involves the conduct of statutory actuarial valuations of various Government of Canada social programs. The OCA will submit, to the appropriate Minister, the Canada Student Loans Program Inter-Valuation Report as at July 31, 2013, the 2015 Employment Insurance Premium Rate Report, the Actuarial Report on the Government Annuities as at March 31, 2014, and the Actuarial Report on the Civil Service Insurance Program as at March 31, 2014. The OCA will also prepare Prospective Savings and Actuarial Tables for the ESDC. Work on the statutory Actuarial Report on the Canada Student Loans Program as at July 31, 2014 will also begin in 2014-15.

In conducting actuarial valuation, the OCA will strive to meet or exceed its accuracy, quality, and timeliness performance targets.

Internal Services

Description:

Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; Acquisition Services; and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

Budgetary Financial Resources (dollars)
2014-15
Main Estimates
2014-15
Planned Spending
2015-16
Planned Spending
2016-17
Planned Spending
55,323,397 55,323,397 73,368,020 71,330,488

Human Resources (FTEs)
2014-15 2015-16 2016-17
194 188 188

Planning Highlights

OSFI’s Internal Services program supports its two strategic outcomes. It is focused on the development and delivery of effective services, policies, advice and guidance in the fields of finance, human resources, security, communication, administration and internal audit. This program is further supported through the development and implementation of cost-effective, secure and reliable information management and technology systems containing relevant, accurate and timely data.

The overall objective of the program is to ensure that OSFI has the proper capacity, processes and systems to allow employees in the business sectors to focus on and perform well in their supervisory, regulatory, and actuarial valuation activities.

The focus for the internal services function includes:

  • Responding to current and emerging business needs through ensuring change management support is in place and identifying and delivering learning needs in a timely and effective manner.
  • Completing the current Information Technology Renewal (ITR) program and preparing OSFI to be able to adopt future emerging technologies in support of planned business needs.
  • Continuing to improve our FRFI and pension plan data governance and delivery processes to ensure accurate and timely analysis for FISC partners, while minimizing burden on filers and OSFI.
  • Continue to strengthen OSFI’s framework of internal controls, including reviewing and improving key internal processes, through a risk-based approach.
  • Developing a vision for the workplace of the future as we prepare for new office accommodation in future years.

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