Analysis of Programs by Strategic Outcome

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Section II: Analysis of Programs by Strategic Outcome

Strategic Outcome 1: A safe and sound Canadian financial system

In 2014-15, OSFI continued to contribute to a safe and sound Canadian financial systemby 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)

2014–15
Main Estimates
2014–15
Planned Spending
2014–15
Total Authorities
Available for Use
2014–15
Actual Spending (authorities used)
2014–15
Difference
(actual minus planned)
77,788,097 77,788,097 77,788,097 79,674,770 1,886,673

Human Resources (FTEs)

2014–15
Planned
2014–15
Actual
2014–15
Difference
(actual minus planned)
413 428 15

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). 90% 100%Footnote 1
Percentage of institutions with a Composite Risk Rating of low or moderate. 80% 91%
OSFI’s regulatory and supervisory framework is consistent with international standards. OSFI’s regulatory and supervisory framework is deemed consistent with international standards. 100%

100%

Three key international assessments of Canada’s regulatory and/or supervisory frameworks were completed during 2014-15, each resulted in an overall “compliant” rating:

Program Performance Analysis and Lessons learned

In 2014-2015, high levels of domestic household indebtedness, exceptionally low interest rates, and falling oil prices 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, risk data aggregation, outsourcing, and internal audit. We continued to develop supporting guidance for OSFI’s Supervisory Framework and initiated a review of our supervisory processes and tools.

In 2014-15, 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 (Source: 2014 Financial Institutions Survey), shows progress toward the Strategic Outcome 1: A safe and sound Canadian financial system.

Sub-Program 1.1.1: Risk Assessment and Intervention

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
2014–15
Actual Spending
2014–15
Difference
(actual minus planned)
55,287,655 57,979,465 2,691,810

Human Resources (FTEs)

2014–15
Planned
2014–15
Actual
2014–15
Difference
(actual minus planned)
282 312 30

Performance Results

Expected Results Performance Indicators Targets Actual Results

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% 0%Footnote 2
Percentage of supervisory letters that are issued within established standards. 80% 89%

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 (BRR) 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’. The CRR is reported to most institutions at least once a year (certain inactive or voluntary wind-up institutions may not be rated). The Supervisory Information Regulations for both banks and insurance companies prohibit institutions (or OSFI) from publicly disclosing their rating. As at the end of March 2015, OSFI had assigned CRR ratings of low or moderate to 91% and above average or high to 9% of all CRR-rated institutions. These percentages are unchanged from the previous year.

Financial institutions are also assigned an intervention (stage) rating, as described in OSFI’s guides to intervention for FRFIs, which determines the degree of supervisory attention they receive. Broadly, these ratings are categorized as: normal; 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, 2015, there were 23 staged institutions. With a few exceptions, most of the staged institutions were in the early warning (stage 1) category.

OSFI continued updating internal guidance and processes 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 initiated the discovery phase of renewing systems and tools to support supervisory processes.

In 2014-15, OSFI focused on various reviews concerning risk management practices at financial institutions, including: 

  • Completing the Enterprise-Wide Stress Testing review which assessed stress-testing capabilities and compliance, as well as integration with institutions’ business strategy, risk management and capital management decisions.
  • Commencing reviews of FRFI’s Own Risk & Solvency Assessments which are performed by insurers to determine if their capital position is adequate and is likely to remain so in the future. 
  • Conducting supervisory reviews which considered institutions’ assessments of their cyber security framework and controls relative to OSFI guidance. 
  • Monitoring FRFIs` progress in meeting OSFI’s expectations with regards to Risk Appetite Framework development and implementation. 

Feedback received from the Financial Institution Survey is being considered in ensuring that our supervisory practices are appropriate to the size and complexity of smaller financial institutions.

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)

2014–15
Planned Spending
2014–15
Actual Spending
2014–15
Difference
(actual minus planned)
16,353,979 15,464,636 (889,343)

Human Resources (FTEs)

2014–15
Planned
2014–15
Actual
2014–15
Difference
(actual minus planned)
101 88 (13)

Performance Results

Expected Results Performance Indicators Targets Actual Results
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% 77% (Source: 2014 Financial Institutions Survey (FIS))
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% 85% (Source: 2014 FIS)
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% 79% (Source: 2014 FIS)

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 the regulatory framework governing FRFIs. OSFI also participates in a number of international and domestic rule-making activities.

The following represents a list of key regulatory guidance issued and policy development undertaken during 2014-15.

Capital related guidelines, advisories and policy work:

  • Liquidity Adequacy Requirements
  • Leverage Requirements
  • Minimum Capital Test major revision
  • Interim Capital Requirements for Mortgage Insurance Companies and policy discussions on the architecture of the capital framework for montage insurers
  • Minimum Continuing Capital and Surplus Requirements technical update
  • As part of its ongoing work in the development of a revised risk based capital framework for life insurance companies, OSFI issued a policy paper on the Life Insurance Capital Framework Standard Approach and requested life insurers participate in a quantitative impact study on the standardized approach

Accounting/Disclosure related guidelines, advisories and policy work:

  • Public Disclosure Requirements for Domestic Systemically Important Banks on Liquidity Coverage Ratio
  • Public Capital Disclosure Requirements related to Basel III Leverage Ratio
  • Early adoption of International Financial Reporting Standards (IFRS) 9 Financial Instruments for Domestic Systemically Important Banks
  • OSFI worked with major Canadian banks to ensure implementation of the Enhanced Disclosures Task Force’s 32 recommendations on financial risk disclosures, resulting in substantial improvement to risk disclosures

Sound Business Practice related guidelines, advisories and policy work:

  • Derivatives Sound Practices guideline – aligns OSFI requirements with international standards
  • Residential Mortgage Insurance Underwriting Practices and Procedures guideline
  • Regulatory Compliance Management guideline
  • Canadian Dollar Offered Rate (CDOR) Benchmark-Setting Submissions advisory
  • Changes to the Membership of the Board or Senior Management advisory

OSFI continued work with the Department of Finance, Canada Deposit Insurance Corporation and the Bank of Canada on issues of recovery and resolution as they would relate to individual financial institutions as well as the control of systemic financial risks. These measures are designed to increase the safety and soundness of the financial system, but also to ensure that timely and effective measures can be taken should the need arise.

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)

2014–15
Planned Spending
2014–15
Actual Spending
2014–15
Difference
(actual minus planned)
6,146,463 6,230,669 84,206

Human Resources (FTEs)

2014–15
Planned
2014–15
Actual
2014–15
Difference
(actual minus planned)
30 28 (2)

Performance Results

Expected Results Performance Indicators Targets Actual Results

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% 88% (Source:  2014 FIS)  
Percentage of completed applications for regulatory approvals that are processed within established standards. 90% 99%

Performance Analysis and Lessons Learned

OSFI administers a regulatory approval process that is prudentially effective, responsive 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 2014-15. More information on service performance standards can be found on OSFI’s website.

In 2014-15, OSFI processed 223 applications of which 200 were approved. Individual applications often contain multiple approval requests. The 200 approved applications involved a total of 371 approvals, 286 of which were granted by the Superintendent and 85 by the Minister. This represents an increase relative to last year, when 199 applications were processed. Most applications processed during 2014-15 related to property and casualty insurers (47%) and banks (41%).

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 2014-15, OSFI made revisions to the following guidance documents:

  • Guide for Incorporating Banks and Federally Regulated Trust and Loan Companies;
  • Advisory on the Legislative Framework for Foreign Banks;
  • Advisories on Substantial Investments;
  • Transaction Instructions on Related Party Asset Transactions as Part of a Restructuring; and
  • Transaction Instructions on Related Party Asset Transactions with a Financial Institution.

During 2014-15, OSFI monitored the impact of the government’s initiative to promote entry and growth of small financial institutions.  While there was a marginal increase of new entry applications, new processes were introduced during the year and their full impact on the government’s initiative may not be fully measureable for one or two more years.  In addition, OSFI introduced a new process for approving reinsurance with unregistered related party reinsurers, which resulted in an increase of applications.

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)

2014–15
Main Estimates
2014–15
Planned Spending
2014–15
Total Authorities
Available for Use
2014–15
Actual Spending (authorities used)
2014–15
Difference
(actual minus planned)
4,420,260 4,420,260 4,420,260 3,944,690 (475,570)

Human Resources (FTEs)

2014–15
Planned
2014–15
Actual
2014–15
Difference
(actual minus planned)
27 26 (1)

Performance Results

Expected Results Performance Indicators Targets Actual Results
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% One plan had two stage rating increases within a three month period, which represented 7% of all stage rating increases during 2014-15.
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% 81% (Source: 2014 Pension Plans Survey (PPS))
Expected Results Performance Indicators Targets Actual Results
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% 78% (Source: 2014 PPS)

Performance Analysis and Lessons Learned

Given the improved financial position of pension plans at the end of 2013, in 2014-15 OSFI consulted with various stakeholders to understand whether plan administrators and employers are considering making major changes to their risk management strategies (risk transference and investment strategies as well as plan design changes). OSFI also discussed what barriers exist to the adoption of risk management solutions.  In general, OSFI has observed that plan administrators and employers are paying closer attention to their pension plans’ underlying risks, and to how these risks can be managed.

Highlights of other activities completed by OSFI to support and strengthen the Regulation and Supervision of Federally Regulated Private Pension Plans include:

  • Registering five Pooled Registered Pension Plan (PRPP) administrators and developing internal processes for the supervision of PRPPs.
  • Supporting the Department of Finance in:
    • producing a draft PRPP Multi-lateral Agreement to promote a coordinated supervisory approach; and
    • assessing a voluntary Target Benefit Plan option under the Pension Benefits Standards Act, 1985
  • Providing up-to-date guidance on the status of changes to federal pension legislation and regulations through its web site and InfoPensions newsletter.  Amendments to the Pension Benefits Standards Regulations were approved in March 2015 and OSFI is expected to issue revised guidance in 2015-16.
  • Developing a questionnaire to be sent to a number of federally regulated defined contribution pension plan administrators.  The results will be analysed in 2015-2016 and will support changes, if any, to OSFI’s supervision of these types of pension plans as well as PRPPs.
  • Updating the Risk Assessment Framework for Federally Regulated Private Pension Plans and the accompanying guidance notes as well as reviewing OSFI’s internal procedures related to the development of a pension plan’s Risk Assessment Summary. 
  • Hosting a webinar in April 2014 that included topics on supervisory findings and expectations, actuarial concerns, and expectations with respect to regulatory approvals.

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

In 2014-15, OSFI continued to contribute to maintaining a financially sound and sustainable Canadian public retirement income systemthrough 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)

2014–15
Main Estimates
2014–15
Planned Spending
2014–15
Total Authorities
Available for Use
2014–15
Actual Spending (authorities used)
2014–15
Difference
(actual minus planned)
5,231,775 5,231,775 5,239,142 5,092,171 (139,604)

Human Resources (FTEs)

2014–15
Planned
2014–15
Actual
2014–15
Difference
(actual minus planned)
35 32 (3)

Performance Results

Expected Results Performance Indicators Targets Actual Results

Stewards of Canada’s public retirement income system receive accurate, high quality and timely professional actuarial services and advice.

Attestation of a 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 100%
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 Confirmation received
Reports are provided to the Minister for tabling in Parliament as per statutory deadlines. 100% 100%

Performance Analysis and Lessons Learned

In 2014-15, 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 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.

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. Throughout the year, the Chief Actuary and his staff delivered presentations addressing these topics to a range of national and international audiences. In 2014-15, the OCA published two mortality studies that address mortality assumptions: Actuarial Study No. 12 Mortality Projections for Social Security Programs in Canada and Actuarial Study No. 14 Pension Plan for the Public Service of Canada Mortality Study.

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)

2014–15
Planned Spending
2014–15
Actual Spending
2014–15
Difference
(actual minus planned)
1,813,723 1,605,410 (208,313)

Human Resources (FTEs)

2014–15
Planned
2014–15
Actual
2014–15
Difference
(actual minus planned)
11 9 (2)

Performance Results

Expected Results Performance Indicators Targets Actual Results

Provide accurate, high quality and timely actuarial valuations informing CPP and 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% 100%
Percentage of recommendations from the previous peer review report and within the scope and influence of the OCA that are implemented before the next peer review. 80% In progress. The recommendations will be mostly implemented as a part of the work on the 27th CPP Actuarial Report to be completed by December 2016.
Reports on CPP and OAS are provided to the Minister for tabling in Parliament as per statutory deadlines. 100% 100%

Performance Analysis and Lessons Learned

In 2014-15, the OCA continued to provide high quality services under its CPP and OAS sub-program, as demonstrated by performance results.

Tabling of the 12th Actuarial Report on the OAS Program

The OCA is required by law to produce an actuarial report on the 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 December 31, 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 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

In May 2014, the OCA released the findings of an external peer panel commissioned to review the 26th Actuarial Report on the CPP. 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.

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, 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.

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)

2014–15
Planned Spending
2014–15
Actual Spending
2014–15
Difference
(actual minus planned)
2,565,065 2,667,952 102,887

Human Resources (FTEs)

2014–15
Planned
2014–15
Actual
2014–15
Difference
(actual minus planned)
18 18 0

Performance Results

Expected Results Performance Indicators Targets Actual Results

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% 100%
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% 100%

Performance Analysis and Lessons Learned

In 2014-15, the OCA continued to provide high quality services under its Public Sector Pension and Insurance Programs sub-program, as demonstrated by performance results.

Public Sector Insurance and Pension Plans

In 2014-15, 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.

Comments and recommendations identified in an Ernst & Young Report from fall 2014 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 and Employment Insurance Programs

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 Employment and Social Development.

Budgetary Financial Resources (dollars)

2014–15
Planned Spending
2014–15
Actual Spending
2014–15
Difference
(actual minus planned)
852,987 818,809 (34,178)

Human Resources (FTEs)

2014–15
Planned
2014–15
Actual
2014–15
Difference
(actual minus planned)
6 5 (1)

Performance Results

Expected Results Performance Indicators Targets Actual Results

Provide accurate, high quality and timely actuarial valuation reports on the 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% 100%
Actuarial reports on CSLP and EI programs are submitted to the Minister/Employment Insurance Commissioner for tabling in Parliament as per statutory deadlines. 100% 100%

Performance Analysis and Lessons Learned

In 2014-15, the OCA continued to provide high quality services under its Canada Student Loans and Employment Insurance Programs sub-program, as demonstrated by performance results.

CSLP Actuarial Report

The CSLP Inter-Valuation Report as at July 31, 2013 was provided to the CSLP in June of 2014 to support Employment and Social Development Canada’s (ESDC) 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 2037-38.

The statutory Actuarial Report on the CSLP as at July 31, 2014 will be submitted to ESDC in June 2015.

Actuarial Report on the Employment Insurance Premium Rate

In 2014-15, the OCA presented the Canada Employment Insurance Commission with 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.

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 Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not those provided to a specific program.

Budgetary Financial Resources (dollars)

2014–15
Main Estimates
2014–15
Planned Spending
2014–15
Total Authorities
Available for Use
2014–15
Actual Spending (authorities used)
2014–15
Difference
(actual minus planned)
55,323,397 55,323,397 55,327,186 57,597,243 2,273,846

Human Resources (FTEs)

2014–15
Planned
2014–15
Actual
2014–15
Difference
(actual minus planned)
194 201 7

Performance Analysis and Lessons Learned

During 2014-15, OSFI continued to focus on delivering effective and efficient internal services in support of business sectors, including undertaking various enhancements as evidenced by the following key achievements.

Communicating Effectively

During 2014-15, OSFI communicated its plans and activities to a wide range of stakeholders via its website and other means. As in previous years, OSFI received many requests to address external conferences and events. The Superintendent and senior OSFI officials delivered presentations across Canada and internationally. The Superintendent appeared before the Senate Standing Committee on Banking, Trade and Commerce, and the Chief Actuary appeared before the House of Commons Standing Committee on Public Accounts.

Coinciding with Jeremy Rudin’s first public address as Superintendent, in September 2014, OSFI began using Twitter to broadcast content to a larger audience. OSFI tweets from two accounts: @OSFICanada (English) and @BSIFCanada (French).

Renewing Technology and Systems

2014-15 marked the successful completion of a five-year Information Technology Renewal program. By the end of the fiscal year, the last three projects concluded as planned and the new systems are providing OSFI with updated business data management capability. OSFI now uses the federal government’s shared SAP platform for its financial and contracting processes; a modern HR Management System enables self-serve transactions; and a Correspondence and Enquiry Management system manages inquiries received from Parliament, federally regulated financial institutions, pension plan members, media and the general public. System upgrades delivered over the preceding four years include: on-line filing for regulatory data; business intelligence analytics tools; a new website; a risk assessment system for the Pension Plans Division; and modernized networking and technology tools. The overall result is significantly fewer applications and rationalized data, and a strong emerging focus on enterprise information management across the Office.

Managing Human Resources

In 2014-15, ongoing risks posed by the current environment, both at the level of the economy and within the financial sector, as well as internal factors, continued to have an impact on how we do our work. To mitigate these risks, a number of priorities were identified through the Human Resources (HR) planning process and the following actions were taken to address gaps:

  • Supported the reorganization of the Supervision Sector, which led to the creation of new sectors for Deposit-taking Institutions, Insurance Institutions and the Supervision Support Group, with staffing expected to be completed early in 2015-16
  • Provided support and oversight to contain costs and growth in the organization, and helped managers identify and reallocate resources to address organizational priorities
  • Continued to update HR policies and guidelines to provide appropriate guidance to managers and employees and to support their consistent application across the organization
  • Focused on employee engagement by ensuring that managers worked with employees to implement action plans to address issues raised in the bi-annual employee survey done in 2013-14
  • Provided learning and development opportunities for staff across the organization based on individual learning plans in support of business plans
  • Continued to support managers in handling complex performance, disability and sick leave cases on a timely basis

Footnotes

Footnote 1

This measure is a proxy for whether OSFI intervened early enough to protect 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 2

Any supervisory rating increases that are two or more levels within a rolling three month period may indicate that risk assessment and/or intervention activities were not timely.  As such, a result of 0% exceeds the target (i.e., tolerance) of 20%.

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