Stress Testing Guideline for Plans with Defined Benefit Provisions (letter)

Type of Publication: Letter
Date: August 31, 2011
To: Administrators of pension plans with defined benefit provisions registered under the Pension Benefits Standards Act, 1985

The Office of the Superintendent of Financial Institutions (OSFI) has issued a Stress Testing Guideline for Plans with Defined Benefit Provisions. The Guideline provides general information to Plan Administrators on stress-testing including the types of scenarios that could be considered and OSFI’s expectations regarding the use and frequency of stress-testing as a risk-management tool.

Over the past couple of years, OSFI has been communicating the importance of being prepared for possible adverse events. In a memo dated December 10, 2008, the Superintendent of Financial Institutions encouraged Plan Administrators to consider a range of longer-term scenarios and to think about responses that were consistent with their risk tolerance. Stress testing is also identified as a positive control for managing risk in OSFI’s Risk Assessment Framework for Federally Regulated Private Pension Plans (Framework). The Framework supports our risk assessments of plans which promote early identification of potential risks to loss of members’ benefits and effective intervention or feedback if necessary.

Questions concerning this Guideline should be addressed to Natalia Uscinowicz, Approvals Officer, Private Pension Plans Division at (613) 990-7868 or at natalia.uscinowicz@osfi-bsif.gc.ca or by facsimile to (613) 990-7394.

Judy Cameron
Managing Director, Private Pension Plans Division