Section II: Analysis of Programs by Strategic Outcome

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Strategic Outcome 1: A safe and sound Canadian financial system

In 2013-14, OSFI continued to contribute to a safe and sound Canadian financial system by maintaining robust regulatory and supervisory frameworks and diligently applying them to the institutions and pension plans it oversees. The effectiveness of services provided is attested by the performance results attained.

Program 1.1: Regulation and Supervision of Federally Regulated Financial Institutions

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)
2013–14
Main Estimates
2013–14
Planned Spending
2013–14
Total Authorities
Available for Use
2013–14
Actual Spending (authorities used)
2013–14
Difference
(actual minus planned)
73,994,821 73,994,821 73,994,821 75,599,505 1,604,684
Human Resources (FTEs)
2013–14
Planned
2013–14
Actual
2013–14
Difference
(actual minus planned)
400 416 16
Performance Results
Expected Results Performance Indicators Targets Actual Results
Protect depositors and policy holders while recognizing that all failures cannot be prevented.

Percentage of estimated recoveries on failed institutions (amount recovered per dollar of claim).

Source: Canada Deposit Insurance Corporation

90% 100%Footnote 3

Program Performance Analysis and Lessons learned

During 2013-14, domestic household indebtedness, interest rate levels, and ongoing global financial uncertainty continued to be seen as sources of potential systemic vulnerability. OSFI took action to address the possible impact of these challenges and achieve its strategic priorities by communicating its expectations for risk management to FRFIs and conducting significant reviews in several areas, including stress testing, cyber security and information technology operational risk, retail credit cards, catastrophic risks, and corporate governance and risk appetite frameworks. OSFI also continued to administer and advance its regulatory and supervisory frameworks and initiated a review of supervisory processes and tools.

In 2013-14, the Regulation and Supervision of Federally Regulated Financial Institutions program and its sub-programs met all performance targets. This, in combination with strong industry opinions that OSFI is effective in monitoring and supervising FRFIs, shows progress toward the Strategic Outcome 1: A safe and sound Canadian financial system.

Sub-Program 1.1.1: Risk Assessment and Intervention

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)
2013–14
Planned Spending
2013–14
Actual Spending
2013–14
Difference
(actual minus planned)
52,237,705 53,878,580 1,640,875
Human Resources (FTEs)
2013–14
Planned
2013–14
Actual
2013–14
Difference
(actual minus planned)
285 301 16
Performance Results
Expected Results Performance Indicators Targets Actual Results
Provide accurate Risk Assessments for institutions which align with their Composite Risk Rating (CRR).

Percentage of knowledgeable observersFootnote 4 that agree that their institution's Composite Risk Rating is appropriate.

Source: Financial Institution Survey (FIS) 2012

70% N/AFootnote 5

Performance Analysis and Lessons Learned

The Composite Risk Rating (CRR) represents OSFI’s overall assessment of an institution's safety and soundness. Beginning in 2013-14, a Branch Risk Rating was assigned to Foreign Bank Branches (FBBs) operating in Canada, rather than a CRR, reflecting OSFI’s limited access to the information needed to assess the FBB’s safety and soundness. There are four possible risk ratings: ‘low’, ‘moderate’, ‘above average’ and ‘high’. As at the end of March 2014, OSFI had assigned CRR ratings of low or moderate to 91% and above average or high to 9% of all CRR-rated institutions. In comparison, as at March 31, 2013, 89% of all rated institutions were assessed as low or moderate CRR, and 11% were assessed above average or high CRR.

Financial institutions are also assigned an intervention (stage) rating which determines the degree of supervisory attention they receive. Broadly, these ratings are categorized as: normal (stage 0); early warning (stage 1); risk to financial viability or solvency (stage 2); future financial viability in serious doubt (stage 3); and non-viable/insolvency imminent (stage 4). As at March 31, 2014, there were 35 staged institutions. With a few exceptions, most of the staged institutions were in the early warning (stage 1) category.

In 2013-14, OSFI participated in the IMF’s FSAP review, which concluded that OSFI continues to be effective with a high level of compliance with international standards. OSFI will be considering the recommendations made in the FSAP report and how they may be addressed moving forward. In addition, OSFI took part in ongoing peer reviews by the FSB and the BCBS, as these are important barometers of how the organization is performing.

Based on the increased expectations for domestic systemically important banks (DSIBs), OSFI implemented organizational changes in the Supervision Sector to provide more focus on teams responsible for managing DSIBs.

OSFI continued updating internal guidance to support its risk-based Supervisory Framework, which considers an institution’s inherent business risks, risk management practices (including corporate governance) and financial condition.

OSFI also embarked on an initial discovery phase to find opportunities for efficiencies in its processes. A review of systems and tools to support OSFI’s supervisory processes is planned during 2014-15, with plans to implement in the succeeding year.

Sub-Program 1.1.2: Regulation and Guidance

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)
2013–14
Planned Spending
2013–14
Actual Spending
2013–14
Difference
(actual minus planned)
14,953,691 16,215,776 1,262,085
Human Resources (FTEs)
2013–14
Planned
2013–14
Actual
2013–14
Difference
(actual minus planned)
85 87 2
Performance Results
Expected Results Performance Indicators Targets Actual Results
Regulations, guidance and other rules that balance prudential considerations and the need to compete.

Percentage of knowledgeable observersFootnote 6 that rate OSFI as being good or very good at developing regulations, guidelines and other rules that strike an appropriate balance between prudential considerations and the need for institutions to compete.

Source: Financial Institution Survey (FIS) 2012

50% 53%

Performance Analysis and Lessons Learned

OSFI provides a regulatory framework of guidance and rules that meets or exceeds international minimums for financial institutions. In addition to issuing guidance, OSFI provides input into the development of federal legislation and regulations affecting FRFIs and comments on accounting, auditing and actuarial standards development, which includes determining how to incorporate them into our regulatory framework. OSFI also participates in a number of international and domestic rule-making activities.

During 2013-14, OSFI continued its consultations related to the eventual revision of the Assessment of Financial Institutions Regulations (2001). The regulations are being revised to ensure that assessments better reflect actual time and resources devoted to financial institutions.
In the area of regulatory guidance, OSFI issued a number of key documents, including:

  • the Liquidity Adequacy Requirements draft guideline;
  • the draft revised MCT;
  • the Own Risk and Solvency Assessment and Regulatory Capital and Internal Capital Targets guidelines;
  • the Mortgage Insurance Underwriting Practices and Procedures draft guideline; and
  • an updated version of the Life Insurance Regulatory Framework.

OSFI continued to work with the Department of Finance, Canada Deposit Insurance Corporation and the Bank of Canada related to issues of recovery and resolution and systemic financial risks. These measures are being taken to increase the safety and soundness of the financial system, but also to ensure that timely and decisive measures can be taken should the need arise.

Through membership on the Accounting and Auditing Issues Subcommittee, OSFI continued to monitor key developments and contribute to international policy work on issues of main concern to OSFI such as the International Accounting Standards Board’s key insurance project.

In 2013-14, OSFI also devoted significant time and resources to participating in the IMF’s FSAP, which resulted in Canada receiving generally high marks for its financial regulatory system.

Sub-Program 1.1.3: Approvals and Precedents

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)
2013–14
Planned Spending
2013–14
Actual Spending
2013–14
Difference
(actual minus planned)
6,803,425 5,505,149 (1,298,276)
Human Resources (FTEs)
2013–14
Planned
2013–14
Actual
2013–14
Difference
(actual minus planned)
30 28 (2)
Performance Results
Expected Results Performance Indicators Targets Actual Results
Provide prudentially sound decisions on Regulatory Approvals.

Percentage of knowledgeable observersFootnote 7 that understand somewhat or very well the basis upon which OSFI makes its decisions as part of the approval process.

Source: Financial Institution Survey (FIS) 2012

85% 87%

Performance Analysis and Lessons Learned

OSFI administers a regulatory approval process that is prudentially effective and transparent.

The soundness of the process is supported by performance results showing that a vast majority of knowledgeable observers understand the basis upon which OSFI makes its decisions. OSFI also has performance standards establishing timeframes for processing applications for regulatory approval and for other services, all of which were surpassed during 2013-14. More information on service performance standards can be found on OSFI’s website.

In 2013-14, OSFI processed 199 applications of which 183 were approved. These involved a total of 406 approvalsFootnote 8, 290 of which were granted by the Superintendent and 116 by the Minister. This represents a decrease in completed applications over the previous year, when 214 applications involving 462 approvals were processed. Most applications for 2013-14 related to banks (40%) and property and casualty insurers (38%).

In keeping with the objective of enhancing the transparency of OSFI’s legislative approval process and promoting a better understanding of our interpretation of the federal financial institution statutes, OSFI develops and publishes legislative guidance including advisories, rulings, and transaction instructions. In 2013-14, OSFI published revised versions of the following transaction instructions:

  • Reinsurance with an Unregistered Related Reinsurer;
  • Guide for Incorporating Banks and Federally Regulated Trust and Loan Companies;
  • Guide for Incorporating Federally Regulated Insurance Companies;
  • Establishment of an Insurance Branch;
  • Acquisition of Control of, or a Significant Interest in, a FRFI ;
  • Substantial Investments Requiring Superintendent Approval - Permitted Entities;
  • Substantial Investments Requiring Ministerial Approval - Permitted Entities; and
  • Asset Transactions Greater than 10% of Assets.

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

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)
2013–14
Main Estimates
2013–14
Planned Spending
2013–14
Total Authorities
Available for Use
2013–14
Actual Spending (authorities used)
2013–14
Difference
(actual minus planned)
4,552,176 4,552,176 4,552,176 4,342,314 (209,862)
Human Resources (FTEs)
2013–14
Planned
2013–14
Actual
2013–14
Difference
(actual minus planned)
27 28 1
Performance Results
Expected Results Performance Indicators Targets Actual Results
Protect the financial interests of federally regulated private pension plan members and beneficiaries.

Percentage of estimated recoveries on pension plans that have terminated under-funded.

Source: Internal data

85% Eight pension plans terminated underfunded in 2013-14. The estimated recovery ratio is 74%.

Performance Analysis and Lessons Learned

During 2013-14, OSFI performed 15 on-site examinations of pension plans, focussing on plan governance, asset management, and communications to members. OSFI also intervened with respect to high-risk pension plans.

Notwithstanding these efforts, the percentage of estimated recoveries on pension plans that terminated underfunded is below target for 2013-14. This was caused by the inability of two employers to fund deficiencies due to their insolvency, thereby impacting three pension plans. Although pension plans are actively monitored by OSFI, the legislation does permit plans to operate with a deficiency and there are occasions when employers become insolvent. The result highlights the fact that once an employer becomes insolvent, OSFI has limited ability to recover funds owed to a pension plan.

In addition to conducting examinations and interventions, OSFI engaged in a suite of activities aimed at supporting and strengthening the performance of the Regulation and Supervision of Federally Regulated Private Pension Plans program. They include:

  • Developing and implementing internal processes for the review of Pooled Registered Pension Plan (PRPP) licence and registration applications, and the licensing of five PRPP administrators.
  • Issuing a Draft Policy Advisory on Longevity Swaps and Longevity Insurance for comment.
  • The implementation of changes to OSFI’s semi-annual “InfoPensions” newsletter in 2013-14 to enhance communications with stakeholders regarding OSFI’s expectations and other matters affecting federally registered pension plans.
  • Processing applications. During 2013-14, the number of transactions submitted to the Superintendent for approval increased considerably, due largely to an increase in the number of amendments to reduce accrued benefits. OSFI processed 104 applications for approval and received 89 new requests.
  • Providing technical assistance to the Department of Finance on proposed changes to pension regulations to implement reforms previously announced by the government. As revised regulations were not published by the government in 2013-14, this work has been carried over into 2014-15.
  • Completing the transfer of 170 First Nations plans to the appropriate provincial regulator in response to a Supreme Court of Canada decision having implications on the jurisdiction over First Nations pensions plans.

Strategic Outcome 2: A financially sound and sustainable Canadian public retirement income system

In 2013-14, OSFI continued to contribute to maintaining a financially sound and sustainable Canadian public retirement income system through the provision of high quality expert actuarial valuation and advice to the Government of Canada and to provincial governments that are Canada Pension Plan (CPP) stakeholders. The soundness of services provided is attested by the performance results attained.

Program 2.1: Actuarial Valuation and Advisory Services

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)
2013–14
Main Estimates
2013–14
Planned Spending
2013–14
Total Authorities
Available for Use
2013–14
Actual Spending (authorities used)
2013–14
Difference
(actual minus planned)
5,203,501 5,203,501 5,239,190 5,209,861 6,360
Human Resources (FTEs)
2013–14
Planned
2013–14
Actual
2013–14
Difference
(actual minus planned)
34 32 (2)
Performance Results
Expected Results Performance Indicators Targets Actual Results
Stewards of Canada’s public retirement income system are provided with independent, accurate, high quality and timely professional actuarial services and advice.

Adequacy of professional experience of the Chief Actuary and staff.

AND

Compliance with Canadian and international professional standards.

Source for both: Review of the Twenty-Sixth Actuarial Report on the Canada Pension Plan, dated March 7, 2014Endnote iv

Unanimous agreement amongst peersFootnote 9. The external peer review panel’s findings published in May 2014Footnote 10 show that the 26th Actuarial Report on the Canada Pension Plan complies with all relevant professional standards of practice and statutory requirements, and that the professional experience of the Chief Actuary and his staff who worked on this report meets the high standard required for this work.

Performance Analysis and Lessons Learned

In 2013-14, the OCA continued to provide independent, accurate, high quality and timely actuarial reports, professional actuarial services and advice. This claim is supported by a third party assessment of the OCA’s expertise and its compliance with professional standards.

With the view of maintaining high quality in services, and as recommended by the CPP independent peer review panel, the OCA continued to maintain its programs of research on subjects relevant to the preparation of future actuarial reports.

Demographic changes such as increasing longevity, as well as uncertain future economic conditions, affect the sustainability of pension systems around the world. Throughout the year, the Chief Actuary and his staff delivered presentations addressing these topics to a range of audiences, including the British Columbia Public Pension Conference, the Society of Actuaries Living to 100 International Symposium, the Board of Directors of the Canada Pension Plan Investment Board, and the International Social Security Association World Social Security Forum.

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

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)
2013–14
Planned Spending
2013–14
Actual Spending
2013–14
Difference
(actual minus planned)
1,877,442 1,677,358 (200,084)
Human Resources (FTEs)
2013–14
Planned
2013–14
Actual
2013–14
Difference
(actual minus planned)
11 11 0
Performance Results
Expected Results Performance Indicators Targets Actual Results
Accurate and high quality actuarial valuations inform Canada Pension Plan and Old Age Security stakeholders and Canadians of the current and projected financial status of the Plan and Program.

Peer review attests that actuarial valuations are comprehensive (i.e. examination of actuarial valuation methods, assumptions and analysis).

AND

Percentage of the recommendations within the scope and influence of the OCA that are implemented before the next peer review.

Source for both: Review of the Twenty-Sixth Actuarial Report on the Canada Pension Plan, dated March 7, 2014Endnote v

Unanimous agreement amongst peersFootnote 1180%

The external peer review panel’s findings published in May 2014Footnote 12 show there is unanimous agreement that the Chief Actuary and staff have adequate professional experience, complete work in compliance with professional standards and statutory requirements, access adequate information and complete relevant data tests and analysis, use reasonable methods and assumptions in completing actuarial reports and that the 26th Actuarial Report on the CPP fairly communicates the results of the work performed by the Chief Actuary and his staff.

The OCA has implemented over 80% of the recommendations of the external peer review panel of the 25th CPP Actuarial Report.

The OCA is working on implementing the recommendations of the external peer review panel of the 26th CPP Actuarial Report (next peer review to take place in 2017).

Performance Analysis and Lessons Learned

In 2013-14, the OCA continued to provide high quality service under its CPP and OAS Program, as demonstrated by performance results.

Tabling of the 26th Actuarial Report on the Canada Pension Plan

The OCA is required by law to produce an actuarial report on the CPP every three years. The 26th Actuarial Report on the CPP as at December 31, 2012 was tabled before Parliament on December 3, 2013. This triennial report projects CPP revenues and expenditures over a 75-year period in order to assess the future impact of historical and projected demographic and economic trends.

The report finds that under the 9.9% legislated contribution rate, assets are projected to increase significantly over the next decade as contribution revenue is expected to exceed expenditures over that period. Assets will continue to grow thereafter until the end of the projection period, but at a slower pace, reaching a level of six years of annual Plan expenditures by 2050. Thus, despite the projected substantial increase in benefits paid as a result of an aging population, the CPP is expected to be able to meet its obligations throughout the projection period and remain financially sustainable over the long term.

External Peer Review of the 26th CPP Actuarial Report

The OCA commissioned an external peer review of the 26th CPP Actuarial Report. First introduced in 1999, external peer review of OCA actuarial reports on the CPP by an independent panel of reviewers is intended to ensure that the actuarial reports meet high professional standards and are based on reasonable assumptions in order to provide sound actuarial advice to Canadians.

The independent panel’s findings confirm that the work performed by the OCA on the 26th CPP Actuarial Report meets all professional standards of practice and statutory requirements, and that the assumptions and methods used are reasonable. The panel also stated that the report fairly communicates the results of the work performed by the Chief Actuary and his staff.

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

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)
2013–14
Planned Spending
2013–14
Actual Spending
2013–14
Difference
(actual minus planned)
2,550,223 2,795,821 245,598
Human Resources (FTEs)
2013–14
Planned
2013–14
Actual
2013–14
Difference
(actual minus planned)
17 16 (1)
Performance Results
Expected Results Performance Indicators Targets Actual Results
Accurate and high quality actuarial valuations of Public Pension and Insurance Plans are provided to departments to inform design, funding and administration of the plans.

Peer review attests that actuarial valuations are comprehensive (i.e. examination of actuarial valuation methods, assumptions and analysis).

AND

Actuarial opinion is appropriate.
Source for both: Office of the Auditor General Peer Review Report on Actuarial Reports prepared in connection with the Public Accounts of Canada as at March 31, 2013 (October 2013)

Unanimous agreement amongst peersFootnote 13

Ernst & Young was retained by the Office of the Auditor General of Canada for purposes of the review of the Public Accounts of Canada as at March 31, 2013.

The reviewers have reached a unanimous agreement on accuracy and quality of actuarial valuations of Public Sector Pension and Insurance Plans for Public Accounts purposes as at March 31, 2013.

Performance Analysis and Lessons Learned

In 2013-14, the OCA continued to provide high quality services under its Public Sector Pension and Insurance Programs Program, as demonstrated by performance results.

Public Sector Insurance and Pension Plans

In 2013-14, the OCA completed four actuarial reports with respect to the public sector insurance and pension plans. These reports were submitted to the President of the Treasury Board for tabling before Parliament. The Actuarial Report on the Pension Plan for the RCMP as at March 31, 2012 was tabled on October 16, 2013, the Actuarial Report on the Benefit Plan financed through the RCMP (dependents) Pension Fund as at March 31, 2013 was tabled on January 22, 2014, and the Actuarial Report on the Pension Plan for the Federally Appointed Judges as at March 31, 2013 was tabled on March 27, 2014. These reports provide actuarial information to decision makers, Parliamentarians and the public, thereby increasing transparency and confidence in Canada’s retirement income system.

The Pension Reform Act amended the Members of Parliament Retiring Allowances Actso that, by no later than January 1, 2017, the total amount of contributions to be paid by members will represent 50% of the current service cost. In addition, for service after January 1, 2016, the age at which a pension may be paid without a reduction is raised from age 55 to age 65. This Act received Royal Assent on November 1, 2012. To reflect the amendments brought forward by the Pension Reform Act, the OCA prepared an actuarial report updating the Actuarial Report on the Pension Plan for Members of ParliamentEndnote vi. The report was tabled before Parliament on May 31, 2013.

Comments and recommendations identified in the October 2013 Ernst & Young Report regarding the actuarial reports review for Public Accounts purposes will be reflected – within the scope and influence of the OCA – in future valuation reports.

Sub-Program 2.1.3: Services to the Canada Student Loans Program

Pursuant to the Student Financial Assistance Act, as amended by the Budget Implementation Act, 2009, this program involves the conduct of statutory actuarial valuations of the Canada Student Loans Program (CSLP). The program also involves the preparation of a statutory actuarial report of the CSLP by evaluating the portfolio of loans and the long-term costs of the program. As part of this program, the Chief Actuary submits the actuarial report to the minister of Human Resources and Skills Development.

Budgetary Financial Resources (dollars)
2013–14
Planned Spending
2013–14
Actual Spending
2013–14
Difference
(actual minus planned)
775,836 736,682 (39,154)
Human Resources (FTEs)
2013–14
Planned
2013–14
Actual
2013–14
Difference
(actual minus planned)
6 5 (1)
Performance Results
Expected Results Performance Indicators Targets Actual Results
Accurate and high quality actuarial valuations inform CSLP stakeholders and Canadians of the future costs and provision rates of the program. The Office of the Auditor General (OAG) performs an audit of the CSLP and uses work from OSFI's actuarial valuation of the CSLP as audit evidence to support the OAG's independent auditor report for the Public Accounts of Canada.
Source: Letter from the OAG, dated May 9, 2013
Confirmation from the OAG. In 2013-14, the OAG used the Actuarial Report on the Canada Student Loans Program as at 31 July 2012 prepared by the OCA as audit evidence.

Performance Analysis and Lessons Learned

In 2013-14, the OCA continued to provide high quality service under its Canada Student Loans Program, as demonstrated by performance results.

Canada Student Loans Program Actuarial Report

The Actuarial Report on the Canada Student Loans Program as at July 31, 2012, was provided to the CSLP in June of 2013 to support Employment and Social Development Canada’s accounting requirements as well as partners’ needs, including the Office of the Auditor General, Treasury Board Secretariat, Department of Finance, and the Office of the Receiver General. The report includes a forecast of the costs and revenues of the Program for 25 years, which is through loan year 2036-37.

The next actuarial report will be prepared as at July 31, 2013 and sent to the CSLP in June 2014.

Actuarial Report on the Employment Insurance Premium RateFootnote 14

In 2013-14, the OCA presented to the Canada Employment Insurance Commission the 2014 Actuarial Report on the Employment Insurance Premium RateEndnote vii that was tabled before Parliament on October 28, 2013. This report provides the forecast break-even premium rate for the upcoming year and a detailed analysis in support of this forecast.

Internal Services

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)
2013–14
Main Estimates
2013–14
Planned Spending
2013–14
Total Authorities
Available for Use
2013–14
Actual Spending (authorities used)
2013–14
Difference
(actual minus planned)
56,518,954 56,518,954 56,521,864 65,650,453 9,131,499
Human Resources (FTEs)
2013–14
Planned
2013–14
Actual
2013–14
Difference
(actual minus planned)
179 190 11

Performance Analysis and Lessons Learned

During 2013-14, OSFI continued to enhance the effectiveness and efficiency of its Internal Services as evidenced by the following key achievements.

Enhancing Communications

During 2013-14, OSFI launched its redesigned website allowing for improved information search, navigation and accessibility. OSFI website subscribers were surveyed for their initial impressions of the new site, and feedback has been overwhelmingly positive. From the previous year, the number of visitors to the website increased by 8% and the number of page views increased by 135%.

Renewing Technology and Systems

2013-14 was the fourth year of OSFI’s five-year Information Technology Renewal initiative. By the end of the fiscal year, a number of significant systems were renewed and are now in use. These include OSFI’s new website, an integrated enterprise resource planning software solution for finance-related processes, as well as a new Regulatory Returns System and upgraded Business Intelligence toolset that improved OSFI’s ability to analyze and report on regulatory filings from deposit-taking institutions.

Managing Human Resources (HR) Challenges

In 2013-14, ongoing risks posed by the current environment, both externally (in the economy and the financial sector) and internally, continued to have an impact on how work is performed at OSFI. As such, a number of priorities were identified through the HR planning process and the following actions were taken to address gaps:

  • A new business model for the delivery of HR services, supported by an upgraded HR system, was implemented.
  • HR policies and guidelines were updated or created to provide appropriate guidance to managers and employees and support a consistent application across the organization.
  • Organization changes in the Supervision Sector were facilitated.
  • Succession plans for critical positions were completed and actions to address gaps were taken.
  • The bi-annual employee survey was conducted, in line with OSFI’s focus on employee engagement.
  • Learning and development opportunities for staff across the organization were provided based on individual and organizational needs.
  • A case management approach for dealing with complex disability and sick leave cases on a timely basis was implemented.

Footnotes

Footnote 3

This measure is a proxy for whether OSFI intervened early enough to prevent undue loss to depositors and/or policyholders. Estimated recovery is the amount on the dollar per claim each policyholder or depositor would receive upon the completion of the liquidation. Expectation ≥ $0.90. The measure is provided annually, based on the updates on the estimated recoveries received from the agent or liquidator. Liquidation may span several years (e.g. life insurance) and affect a number of annual updates to the estimated recovery. As such, an annual update is made to the actual result for this indicator, regardless of whether any FRFI’s failed that year or not.

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Footnote 4

Senior Executives and professionals who act on behalf of federally regulated financial institutions.

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Footnote 5

During 2013-14, OSFI updated its Performance Measurement Framework, which no longer includes this specific indicator. OSFI’s 2014-15 RPP includes new performance indicators in lieu of the CRR: 1- Percentage of supervisory rating increases that are two or more levels within any rolling three month period; and, 2- Percentage of supervisory letters that are issued within established standards).

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Footnote 6

Senior Executives and professionals who act on behalf of federally regulated financial institutions.

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Footnote 7

Senior Executives and professionals who act on behalf of federally regulated financial institutions.

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Footnote 8

Individual applications often contain multiple approval requests.

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Footnote 9

Independently selected panel of peers / actuaries.

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Footnote 10

Next Independent Peer Review to occur in 2017.

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Footnote 11

Independently selected panel of peers / actuaries.

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Footnote 12

Next Independent Peer Review to occur in 2017.

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Footnote 13

Independently selected panel of peers / actuaries.

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Footnote 14

OSFI’s PAA was updated in 2013 in order to reflect the addition of Employment Insurance work to this sub-program.  The sub-program title and description change is reflected in the 2014-15 Report on Plans and Priorities.

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