Section III: Analysis of Programs and Internal Services

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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 laws 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, Green Shield Canada Act, Protection of Residential Mortgage or Hypothecary Insurance 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.

Program Performance Analysis and Lessons Learned
In 2015-16, high levels of domestic household indebtedness, sustained low interest rates, low and volatile oil prices 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 corporate and commercial lending, retail lending, outsourcing, risk management, and compliance. The office continued to develop supporting guidance for OSFI’s Supervisory Framework and initiated a review of supervisory processes and tools.

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 from 2014 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.

Budgetary Financial Resources (dollars)

2015–16
Main Estimates
2015–16
Planned Spending
2015–16
Total Authorities Available for Use
2015–16
Actual Spending (authorities used)
2015–16
Difference (actual minus planned)
78,956,478 78,956,478 78,956,478 76,831,313 (2,125,165)

Human Resources (FTEs)

2015–16
Planned
2015–16
Actual
2015–16
Difference (actual minus planned)
452 418 (34)

Performance Results Footnote 1

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 2
Percentage of institutions with a Composite Risk Rating of low or moderate. 80% 94%
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:

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 to protect depositors and policy holders.

Performance Analysis and Lessons Learned
The Composite Risk Rating (CRR) represents OSFI’s overall assessment of an institution's safety and soundness. There are four possible risk ratings: “low”, “moderate”, “above average” and “high”. The CRR is reported to most institutionsFootnote 3 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 2016, OSFI had assigned CRR ratings of low or moderate to 94% and above average or high to 6% of all CRR-rated institutions.

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 (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, 2016, there were 24 staged institutions, most falling in the early warning (stage 1) category.

In 2015-16, the Risk Assessment and Intervention sub-program focused on the following activities:

  • Pursued the review of its supervisory methodology and processes and developed the requirements for a technology solution in support of supervisory activities.
  • Continued to meet with banks independently and collectively at the Canadian Bankers Association level to discuss progress and to reiterate OSFI’s expectations to meet specified completion timelines with respect to risk data aggregation and risk reporting.
  • Completed compensation cross-system reviews at the DSIBs, continued to monitor their development and operationalization of Risk Appetite Frameworks, and developed plans to commence pilot work related to risk culture in 2016-17.
  • Formalized the draft Operational Risk Management Guideline which clarifies OSFI’s expectations for FRFIs’ operational risk management.
  • Actively monitored regulated entities’ progress in the development of their cyber security programs and established formal and timely reporting on major DSIB cyber security incidents. OSFI also continued to monitor federal cyber security legislation developments to ensure coordination with OSFI’s activities in this area.
  • Continued to develop an OSFI Risk Tolerance Framework to help prioritize and scale supervisory work.
  • Undertook a macro stress testing exercise with DSIBs to project the impacts of a severe but plausible scenario and gather insights into the banking system’s resilience.
  • With the view of maintaining a highly knowledgeable supervisors’ complement, the office hosted supervisory colleges for three of Canada’s five largest banks. It also pursued the Supervision Training Initiative aimed at ensuring that fundamental supervision skills are learned and maintained.

Budgetary Financial Resources (dollars)

2015–16
Planned Spending
2015–16
Actual Spending
2015–16
Difference (actual minus planned)
53,698,903 55,177,551 1,478,648

Human Resources (FTEs)

2015–16
Planned
2015–16
Actual
2015–16
Difference (actual minus planned)
328 302 (26)

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 4
Percentage of supervisory letters that are issued within established standards. 80% 90%

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 includes the issuance of various forms of guidance, which may include guidelines and advisories as well as 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.

Performance Analysis and Lessons Learned
OSFI provides a regulatory framework of guidance and rules that assist federally regulated financial institutions in mitigating risks inherent to their activities. The framework is appropriately adapted to the Canadian environment, often aligning with international standards where equivalent guidance exists. 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 2015-16. Capital related guidelines, advisories and policy work:

  • Capital requirements for loans secured by residential real estate – requirements were developed over the year, with the draft proposal issued in April 2016.
  • Life Insurance Capital Adequacy Test (draft issued in March 2016) – capital standards for life insurers to be in force as of January 2018.
  • Minimum Continuing Capital and Surplus Requirements and Minimum Capital Test - both guidelines received technical updates.
  • Company-specific models for determining capital requirements for property and casualty insurance companies - the Property and Casualty Minimum Capital Test Advisory Committee continued development of a models based framework.
  • Capital requirements for residential mortgage insurance risk - in consultation with mortgage insurers, work progressed on the development of a new regime to be implemented in 2017.
  • OSFI contributed to the development of a statutory bail-in regime which will apply to Canada’s six DSIBs. The amendments, which became law on June 22, 2016, will be supported by forthcoming regulations and regulatory guidance.
  • Work progressed on the development of a stand-alone capital framework.

Accounting/Disclosure related guidelines, advisories and policy work:

  • Pillar 3 Disclosure Requirements – a draft guideline was issued to clarify the domestic implementation of the Revised Basel Pillar 3 standards for Canadian DSIBs and for non-DSIBs.
  • IFRS 9 Financial Instruments and Disclosures – a draft guideline was issued that outlines OSFI’s expectations regarding the domestic implementation of IFRS 9 Financial Instruments.

Sound Business Practice related guidelines, advisories and policy work:

  • Operational Risk Management – a draft guideline was issued that establishes OSFI’s expectations for operational risk management using a principles-based approach.
  • Margin Requirements for Non-Centrally Cleared Derivatives – the guideline establishes minimum standards for the exchange of margin to secure performance on non-centrally cleared derivative transactions undertaken by covered entities.

Budgetary Financial Resources (dollars)

2015–16
Planned Spending
2015–16
Actual Spending
2015–16
Difference (actual minus planned)
20,579,977 14,837,533 (5,742,444)

Human Resources (FTEs)

2015–16
Planned
2015–16
Actual
2015–16
Difference (actual minus planned)
93 87 (6)

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)

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 involves evaluating and processing applications for regulatory consent; establishing positions on the interpretation and application of the federal financial institutions’ legislation, regulations and guidance; identifying precedential transactions that may raise policy or precedent-setting issues; and developing recommendations that recognize the need to allow institutions to compete effectively and take reasonable risk.

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 2015-16. More information on service performance standards can be found on OSFI’s website.

In 2015-2016, OSFI processed 210 applications of which 196 were approved. Individual applications often contain multiple approval requests. The 196 approved applications involved a total of 434 approvals, 282 of which were granted by the Superintendent and 152 by the Minister. The number of applications decreased relative to last year, when 200 applications were approved. The majority of approved applications for 2015-2016 related to property and casualty insurers (45%) and banks (35%).

In keeping with the objective of enhancing the transparency of OSFI’s legislative approval process and promoting a better understanding of the interpretation of the federal financial institution statutes, OSFI develops and publishes legislative guidance including advisories, rulings, and transaction instructions. In 2015-2016, OSFI issued the following guidance documents:

  • Ruling 2015-01 – Demutualization – Property and Casualty Companies – Eligible Policyholders
  • Guide for the Demutualization of Mutual Property and Casualty Insurance Companies with Non-mutual Policyholders

During 2015-16, OSFI made recommendations that resulted in the Minister of Finance’s approval of eleven new federally regulated financial institutions, including six under the Bank Act and five under the Insurance Companies Act. In addition, OSFI worked on an application to continue a provincial credit union as the first Federal Credit UnionFootnote 5. OSFI also developed a Federal Credit Union Continuance Guide that is expected to be published in Q2 2016-17, to provide guidance for provincial credit unions that are interested in transitioning to federal regulation.

Budgetary Financial Resources (dollars)

2015–16
Planned Spending
2015–16
Actual Spending
2015–16
Difference (actual minus planned)
4,677,598 6,816,229 2,138,631

Human Resources (FTEs)

2015–16
Planned
2015–16
Actual
2015–16
Difference (actual minus planned)
31 29 (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% 98%

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 funding requirements and are complying with their governing laws and supervisory requirements. This program provides risk assessments of pension plans covering employees in federally regulated areas of employment. It ensures timely and effective intervention and feedback to protect the interests of plan members and beneficiaries, while recognizing that plan administrators are ultimately responsible and that plans can fail to pay the expected benefits. This program also provides a balanced relevant regulatory framework and a prudentially effective and responsive approvals process.

This program incorporates activities pertaining to 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 and the Pooled Registered Pension Plans Act. The costs for this program are recovered from pension plan fees based on the number of members in each federally regulated pension plan.

Performance Analysis and Lessons
Learned Employers and plan administrators continue to look at ways to reduce the risks of operating their defined benefit (DB) pension plans in the face of recurring market volatility, declining long-term interest rates, and improvements in life expectancy. Evidence includes the highest ever value of group annuity purchases in Canada in 2015 and the completion of the first Canadian longevity insurance deal which transferred longevity risk from a pension plan to a life insurer.

In addition to the ongoing trend away from DB to defined contribution (DC) pension plans, a regulatory framework was recently established for Pooled Registered Pension Plans (PRPPs). DC plans, including PRPPs, were an important focus of OSFI’s efforts in 2015-16.

OSFI conducted a study of DC plans as part of its review of supervisory approaches applicable to such plans. Based on the results, OSFI is considering whether to increase the information it collects from DC plans to better monitor the quality of plan governance, particularly related to member communications and investments.

Regarding PRPPs, OSFI worked to prepare PRPP guidance for members and administrators. A PRPP Member Guide is being developed that describes members’ rights and interests; the Member Guide is expected to be published in 2016-17, along with guides covering PRPP licensing and registration.

OSFI is also developing supervisory approaches for PRPPs in anticipation of their possible future growth that could result from the Multilateral Agreement between the federal government and provinces with similar legislation, once it is concluded. This work included: revising the Annual Information Return, updating procedures related to OSFI interventions to include PRPPs as well as making required systems changes.

Highlights of other activities completed by OSFI to support and strengthen the regulation and supervision of federally Registered Private Pension Plans in 2015-16 include:

  • Issuing revised guidance, including a Member Guide and DB and DC Termination Guides, as well as a revised Actuarial Guide.
  • Posting two “webinars” to explain changes to regulations and assist with the filing of pension plan returns in the new Regulatory Reporting System.
  • Hosting an in-person pension forum to meet and communicate with pension stakeholders on PPPD’s key activities, legislative requirements, and expectations regarding pension supervision and actuarial practices.
  • Supporting the Department of Finance in finalizing the Multilateral Agreement for PRPPs and various legislative proposals.

Budgetary Financial Resources (dollars)

2015–16
Main Estimates
2015–16
Planned Spending
2015–16
Total Authorities Available for Use
2015–16
Actual Spending (authorities used)
2015–16
Difference (actual minus planned)
4,105,818 4,105,818 4,105,818 3,984,053 (121,765)

Human Resources (FTEs)

2015–16
Planned
2015–16
Actual
2015–16
Difference (actual minus planned)
28 26 (2)

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% 6%Footnote 6
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))
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)

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 stakeholders and several federal government departments. It conducts statutory actuarial valuations of the CPP, Old Age Security (OAS), Employment Insurance (EI) 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.

Performance Analysis and Lessons Learned
In 2015-16, 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.

The OCA submission to the International Social Security Association regional good practice competition for the Americas “Actuarial Assumptions Development – deepening the expertise and enhancing the independence of the Chief Actuary” has been awarded the Certificate of Merit by the international jury. It stated that considering a wide range of opinions, being open and transparent, and maintaining internal and external controls allow the Chief Actuary to fulfill his or her mandate in a professional and independent manner.

In the current environment of uncertain economic growth, the question of properly reflecting the impacts of social security programs on the sustainability of public finances is closely examined by governments and major international organizations. Drawing on its involvement in determining assets and liabilities of the CPP for the purpose of the Public Accounts of Canada, the OCA contributed extensively to this discussion. The position of the OCA is that in order to provide a comprehensive and objective picture, future developments (including evolution of future contributors and beneficiaries of a social security program) should be taken into account in both assessing the long-term sustainability and in compiling a balance sheet.

In 2015-2016, the OCA published two mortality studies that address mortality assumptions: Actuarial study No. 15 Pension Plan for the Royal Canadian Mounted Police Mortality Study and Actuarial study No. 16 Canada Pension Plan Retirement, Survivor and Disability Beneficiaries Mortality Study.

The Office of the Auditor General (OAG) also informed the OCA in 2015‑16 that it would be using, as independent evidence, work that the OCA performed for the Public Accounts of Canada 2014‑15 tabled in the House of Commons on December 7, 2015.

Budgetary Financial Resources (dollars)

2015–16
Main Estimates
2015–16
Planned Spending
2015–16
Total Authorities Available for Use
2015–16
Actual Spending (authorities used)
2015–16
Difference (actual minus planned)
6,130,074 6,130,074 6,130,074 5,443,559 (686,515)

Human Resources (FTEs)

2015–16
Planned
2015–16
Actual
2015–16
Difference (actual minus planned)
37 33 (4)

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 N/A for 2015-16Footnote 7
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 of the use of OCA’s work as independent evidence for Public Accounts of Canada received from the OAG.
Reports are provided to the Minister for tabling in Parliament as per statutory deadlines. 100% 100%

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

Description
This program involves the preparation of statutory actuarial valuations and providing expert actuarial advice and services on 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.

Performance Analysis and Lessons Learned
In 2015‑16, the OCA continued to provide high quality services under its Canada Pension Plan and Old Age Security Program sub‑program, as demonstrated by performance results.

At their meeting on December 21, 2015, the Federal and Provincial Ministers of Finance concluded the 2013-2015 review of the CPP. The Ministers have announced that, based on the estimates presented in the 26th Actuarial Report on the Canada Pension Plan as at December 31, 2012 prepared by the OCA, the current legislated contribution rate of 9.9% is expected to be sufficient to sustain the Plan over the foreseeable future. As a result, no changes to either benefits or contributions rates were recommended.

The statutory 2016-2018 CPP review started in January 2016. Since the triennial statutory actuarial report on the CPP is one of the key inputs to this review, the OCA commenced its work on the 27th Actuarial Report on the Canada Pension Plan as at December 31, 2015. Part of the work involved in producing this report includes addressing and implementing recommendations resulting from the most recent peer review report published in May 2014.

Further to that, the OCA held its triennial inter-disciplinary Canada Pension Plan Seminar in September 2015, titled “Seminar on Demographic, Economic and Investment Perspectives for Canada Years 2015 to 2050”. The main objective of this recurring CPP seminar is to consult with experts from various organizations representing multiple fields, and federal and provincial governments before setting the assumptions to be used in the CPP actuarial reports. It is important, when developing demographic and economic assumptions, to keep a long-term view and not be unduly swayed by short-term trends. However, the final assumptions must also take into account the short- and medium-term trends so as to properly project the financial status of the CPP over the next few years.

Budgetary Financial Resources (dollars)

2015–16
Planned Spending
2015–16
Actual Spending
2015–16
Difference (actual minus planned)
2,370,284 1,717,458 (652,826)

Human Resources (FTEs)

2015–16
Planned
2015–16
Actual
2015–16
Difference (actual minus planned)
13 12 (1)

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% N/A for 2015‑16Footnote 8
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% As at March 31, 2016, out of eight recommendations, the OCA decided not to implement two . Two recommendations were implemented and the remaining four are in progress and should be completed with the release of the 27th CPP Actuarial Report in 2016‑17.
Reports on CPP and OAS are provided to the Minister for tabling in Parliament as per statutory deadlines. 100% N/A for 2015‑16 – next statutory deadline for CPP is in 2016‑17.

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

Description
This program involves the preparation 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 provides actuarial information to decision makers, parliamentarians and the public, thereby increasing transparency and confidence in Canada’s retirement income system. It serves the public interest by ensuring good governance of the plans, appropriate disclosure in the actuarial reports and contributing to the overall accountability of the plans sponsor to various stakeholders. 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.

Performance Analysis and Lessons Learned
In 2015‑16, the OCA continued to provide high quality services under its Public Sector Pension and Insurance Programs sub‑program, as demonstrated by performance results. 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), the Department of Justice, and Public Works and Government Services Canada (PWGSC) in the design, funding and administration of the plans for which they are responsible.

As part of its statutory requirements, the OCA completed two 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 Public Service of Canada as at March 31, 2014 and the Actuarial Report on the Public Service Death Benefit Account as at March 31, 2014 were both tabled on January 25, 2016. These reports provide actuarial information to decision makers, Parliamentarians and the public, thereby increasing transparency and confidence in Canada’s retirement income system. Work on the Actuarial Report on the Royal Canadian Mounted Police as at 31 March 2015 also began in 2015‑16.

Comments and recommendations identified in an Ernst and Young Report from fall 2015 regarding the actuarial reports review for Public Accounts purposes will be reflected – within the scope and influence of the OCA – in future valuation reports.

The Office of the Auditor General (OAG) informed the OCA in 2015‑16 that it would be using work it performed for the Public Accounts of Canada 2014‑15 tabled in the House of Commons on December 7, 2015. This included utilizing OCA’s work as an independent evidence for the OAG’s audit of the Public Accounts of Canada for programs included under the Public Sector Insurance and Pension Programs.

Budgetary Financial Resources (dollars)

2015–16
Planned Spending
2015–16
Actual Spending
2015–16
Difference (actual minus planned)
3,135,790 2,922,047 (213,743)

Human Resources (FTEs)

2015–16
Planned
2015–16
Actual
2015–16
Difference (actual minus planned)
20 16 (4)

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%

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

Description
Pursuant to the Canada Student Financial Assistance Act, the Employment Insurance Act, and Department of Employment and Social Development Act this sub-program involves preparing 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.

Performance Analysis and Lessons Learned
In 2015‑16, the OCA continued to provide high quality services under its Canada Student Loans and Employment Insurance programs sub‑program, as demonstrated by performance results. This sub-program also includes services relating to the annual actuarial reports on the Government Annuities and the Civil Service Insurance Program.

As part of its statutory requirements, the OCA submitted to the Minister of Employment and Social Development Canada the Actuarial Report on the Canada Student Loans Program as at July 31, 2014, that was tabled before Parliament on January 20, 2016. The report presents an evaluation of the Program's overall financial costs and increases the level of information available to decision makers, Parliamentarians and the public. Work on the Inter-Valuation Report on the Canada Student Loans Program as at July 31, 2015 also began in 2015‑16. The OCA also presented, to the Canada Employment Insurance Commission, the 2016 Actuarial Report on the Employment Insurance Premium Rate that was tabled before Parliament on December 10, 2015. This report provides the forecast break-even premium rate for the upcoming year and a detailed analysis in support of this forecast.

The OCA also submitted the Actuarial Report on the Government Annuities as at March 31, 2015, and the Actuarial Report on the Civil Service Insurance Program as at March 31, 2015 for Employment and Social Development Canada and Service Canada for accounting purposes.

The Office of the Auditor General (OAG) informed the OCA in 2015‑16 that it would be using work it performed for the Public Accounts of Canada 2014‑15 tabled in the House of Commons on December 7, 2015. This included utilizing OCA’s work as an independent evidence for the OAG’s audit of the Public Accounts of Canada for programs covered under the CSLP and Government Annuities.

Budgetary Financial Resources (dollars)

2015–16
Planned Spending
2015–16
Actual Spending
2015–16
Difference (actual minus planned)
624,000 804,054 180,054

Human Resources (FTEs)

2015–16
Planned
2015–16
Actual
2015–16
Difference (actual minus planned)
4 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%

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. Internal services include only those activities and resources that apply across an organization, and not those provided to a specific program. The groups of activities 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; and Acquisition Services.

Performance Analysis and Lessons Learned
During 2015-16, 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 2015-2016, 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. OSFI began using webcast information sessions as a means of providing two-way communication with stakeholders. This format has been very well received and OSFI will be looking to expand its use of this tool moving forward. OSFI’s external newsletter, The Pillar, was published four times in 2015-2016. It updates stakeholders on the latest guidelines, notices, public statements, and other pertinent information. Internally, a new, more robust intranet site was implemented to ensure all employees are kept apprised of the latest internal initiatives as well as regulatory activities being implemented externally. In addition, webcast town halls were introduced to simultaneously communicate with all OSFI staff and to enhance communication with staff across all OSFI offices.

Renewing Technology and Systems
Through 2015-16, OSFI focused on strengthening its cyber security posture through the development of its cyber security strategy and action plan aimed at enhancing IT security controls and governance processes. The Office’s privacy/information management program continues to mature with the delivery of an extensive awareness program across the organization in 2015-16 and the implementation of a multi-year project to deliver a new electronic document and records management system. Corporate services and internal audit staff have successfully moved over to the new system, with the remaining staff scheduled to onboard in 2016-17. Timely and effective change management practices are in place to support this initiative.

Finally, Government of Canada’s (GoC) Shared IT Services programs continue to be tracked and GC shared solution opportunities have been integrated, where appropriate, into IM/IT plans.

Managing Human Resources
In 2015-2016, a number of priorities were identified through the Human Resources (HR) planning process and a variety of actions were taken to support OSFI’s strategic outcomes. The reorganization of the Supervision Sector was finalized, with new senior managers hired to lead the Deposit-taking Supervisions Sector, the Insurance Supervision Sector and the Supervision Support Group. Support and oversight was provided to contain costs and growth in the organization and to help managers identify and reallocate resources to address organizational priorities. A bi-annual employee engagement survey was launched with results to be made available in 2016-17. Support was provided to the supervisory groups in the development of a Supervision Training Initiative, a modular learning program for OSFI employees. During 2015-2016, core learning modules were identified and developed, and delivery to staff has begun. Work commenced to develop a five-year Human Capital Strategy to set the strategic direction for HR Policies, programs and practices in support of OSFI’s Compass for Success.

Budgetary Financial Resources (dollars)

2015–16
Main Estimates
2015–16
Planned Spending
2015–16
Total Authorities Available for Use
2015–16
Actual Spending (authorities used)
2015–16
Difference (actual minus planned)
58,741,742 58,741,742 58,741,742 57,959,652 (782,090)

Human Resources (FTEs)

2015–16
Planned
2015–16
Actual
2015–16
Difference (actual minus planned)
201 189 (12)

Footnotes

Footnote 1

See OSFI’s Methodology for Key Performance Indicators.

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Footnote 2

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 3

Certain inactive or voluntary wind-up institutions may not be rated.

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Footnote 4

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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Footnote 5

Received approval of the Minister of Finance on July 1, 2016.

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Footnote 6

Any stage 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 6% exceeds the target (i.e., tolerance) of 20%.

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Footnote 7

Next peer review findings expected to be published in 2017-18.

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Footnote 8

Next peer review findings expected to be published in 2017‑18.

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