Opinion of the United Kingdom Government Actuary's Department (GAD) on 32nd CPP Report Peer Review

18 June 2026

Dear Assia

Subject: Opinion on the external peer review of the 32nd Actuarial Report on the Canada Pension Plan (CPP)

The Office of the Superintendent of Financial Institutions Canada (OSFI) has commissioned an external peer review of its 32nd Actuarial Report on the CPP as at 31 December 2024 (AR32).

The OSFI has asked the Government Actuary’s Department (GAD, “we”, “us”) of the United Kingdom to provide an opinion on the work performed by the external peer reviewers.

We have read the external peer review report and set out our opinion below.

1. GAD opinion on external peer review

• 1.1 We are of the opinion that, based on the contents of their report, it is reasonable that the external peer reviewers have given a positive opinion on all five of the questions listed in the terms of reference for their review. We are of the opinion that nothing in the external peer review gives cause for concern or indicates that the peer reviewers have not carried out a comprehensive review of the AR32.

• 1.2 Both the AR32 and its external peer review are thorough, covering a large volume of information. Stated purposes of the AR32 include “to inform contributors and beneficiaries of the current and projected financial states of the CPP” and “to contribute to an informed public discussion of the finances of the CPP”. In our view there was scope for the external peer review to comment further and make additional recommendations on how the AR32 is presented so that future reviews can better inform contributors and beneficiaries and better contribute to informed public discussion.

• 1.3 The remainder of this letter provides information on the process we have followed and more detail on our opinion.

2. GAD’s role in the AR32

• 2.1 The external peer review is intended to ensure that the Office of the Chief Actuary (OCA) is providing sound and relevant actuarial advice to Members of the Canadian Parliament and to the Canadian population.

• 2.2 Under the contract dated 12 June 2025, the OSFI asked the Government Actuary’s Department (GAD) of the United Kingdom to:

  1. “Assist with the selection of the applicants who will perform the peer review by ranking them based on their comparative qualifications as independent actuaries; and

  2. Provide an opinion on the work performed by the reviewers once the peer review has been completed.”

• 2.3 The objective for GAD’s role is to ensure impartiality and to enhance the credibility of the external peer review.

• 2.4 GAD fulfilled the first part of the OSFI’s request, advising on the selection of the independent actuaries, in August 2025. GAD received 17 applications^{Footnote 1} directly from individuals wishing to be appointed as peer reviewers and assessed their applications using weighted selection criteria. These criteria included the level of experience of the applicants in social insurance, pensions and investment and risk management, as well as the applicants’ qualifications, status in the actuarial profession and previous experience as a CPP reviewer. GAD provided the Chief Actuary with a schedule setting out the results of our assessment, with a ranking of the top six candidates. The Chief Actuary successfully entered into an agreement with three of these candidates to undertake the peer review.

• 2.5 This letter addresses the second part of the OSFI’s request, providing our opinion on the work done by the peer reviewers as detailed in the report, “Review of the 32nd Actuarial Report on the Canada Pension Plan” (“the external peer review”) dated 29 April 2026 prepared by Stephen J. Butterfield, FCIA, Iyad Hourani, FCIA, FSA and Michel St. Germain, FCIA, FSA.

• 2.6 In preparing this opinion on the external peer review, our assessment is based on the contents of the Peer Review. We note the AR32 (as revised on 6 April 2026)^{Footnote 2} and its overall content and structure but we have not read the AR32 itself in detail for the purposes of preparing this opinion.

3. External peer review - terms of reference

• 3.1 The terms of reference for the external peer review were:

  “The peer reviewers will review the work performed by the Chief Actuary in completing the 32nd Actuarial Report on the Canada Pension Plan as at December 31, 2024.

  Following their review, they will provide a report to the Chief Actuary and the UK Government Actuary’s Department (GAD). GAD will then provide its opinion of the peer review to the Chief Actuary.

  In their report, the reviewers should include opinions on these questions and provide recommendations:

  1. Is the professional experience of the Chief Actuary and their staff who worked on the report adequate for carrying out the work required?
  2. Did the Chief Actuary complete the work in compliance with the relevant professional standards of practice and statutory requirements?
  3. Did the Chief Actuary have access to the information required to perform the valuation? Were relevant tests and analysis on the data completed as might be expected?
  4. Were the actuarial methods and assumptions used in completing the report reasonable?
  5. Does the actuarial report fairly communicate the results of the work performed by the Chief Actuary and their staff?

  In providing opinions on the questions listed above, the peer reviewers must also provide such recommendations as they deem appropriate with respect to future actuarial reports on the Canada Pension Plan prepared by the Office of the Chief Actuary.”

4. Summary of the external peer review

• 4.1 The approach taken to the external peer review is comprehensive, thorough and clearly aligned with each of the items in their terms of reference.

• 4.2 The external peer review is very clear about the remit of the peer reviewers. The external peer review begins with a focus on the professional qualifications of, and the professional standards applied by, those carrying out the AR32. There is particular attention to the data, assumptions, methodology covering all key areas one item at a time. There is then a commentary on each of; the analysis of change between the AR32 and AR31 (the previous actuarial review of the CPP), the sensitivity analysis and the adjustment factors. The external peer review then concludes with comments on the overall approach to communication in AR32.

• 4.3 The peer reviewers were able to give a positive answer to all five of the questions. We note that, of the aspects of the AR32 which they considered, the peer reviewers concluded that all were reasonable.

• 4.4 Appendix A of the external peer review offers a suggestion that, notwithstanding the financing policy for the CPP being out of scope, the financing policy should be reviewed. Appendix A goes on to query the use of “best estimate” assumptions for the AR32. We are aware that there are valid arguments, some linked to matters of intergenerational fairness, that can support both “best estimate” assumptions or alternative assumptions which may, in effect, favour one generation over another. The latest actuarial review of the UK social security system adopts best estimate assumptions^{Footnote 3}.

• 4.5 The external peer review notes that it does not provide a detailed audit of the data nor verification of the accuracy of the models. Similarly, the peer reviewers have not made a detailed evaluation of the appropriateness of the response of the Chief Actuary to the findings of the previous peer review of the 31st Actuarial Report on the CPP (set out in Appendix B).

• 4.6 The peer reviewers have complimented the Chief Actuary and her staff on their competence, commitment and professionalism, mentioning that they were “very helpful in clarifying issues raised by the review panel and in providing additional information”. The peer reviewers have offered 6 recommendations which they considered would enhance future actuarial reports “in the spirit of seeking to help the Chief Actuary and their staff to continue improving their work”.

5. GAD’s views on the external peer review

• 5.1 We are of the opinion that, based on the contents of their report, it is reasonable that the external peer reviewers have given a positive opinion on all five of the questions listed in the terms of reference for their review. We are of the opinion that nothing in the external peer review gives cause for concern or indicates that the peer reviewers have not carried out a comprehensive review of the AR32.

• 5.2 We are content that the terms of reference of the external peer review are sufficient to enable the peer reviewers to address all of the relevant issues they need to in order to perform a detailed review of the actuarial work underlying the AR32 and the contents of the report itself.

• 5.3 It is clear from the external peer review that there are a number of areas in the AR32 where its presentation could potentially be streamlined, without detracting from the underlying analysis or the purposes of the report. Such simplifications may allow the actuarial reviews of the CPP to have improved effectiveness for readers. Examples identified in the external peer review where there may be scope for simplifications include the granularity of reporting (paragraph 5.4.1), the use of “select and ultimate” assumptions (paragraph 6.1), the periods over which experience data is analysed (paragraph 6.5.4) and the expression of results to spurious accuracy given the uncertainties inherent (Section 7 records the effect of a methodological change to 3 decimal places).

• 5.4 Both the AR32 and its external peer review are thorough, covering a large volume of information. Stated purposes of the AR32 include “to inform contributors and beneficiaries of the current and projected financial states of the CPP” and “to contribute to an informed public discussion of the finances of the CPP”. In our view there was scope for the external peer review to comment further and make additional recommendations on how the AR32 is presented so that future reviews can better inform contributors and beneficiaries and better contribute to informed public discussion.

• 5.5 Areas which the external peer review could have identified recommendations to improve communications include; the sequencing and structure of the information provided, materiality decisions in deciding the data, the methodologies and assumptions to adopt when carrying out the reviews, proportionality decisions as to what information is (and is not) included in the reporting and the use of graphical or illustrative presentations to help readers understand the main conclusions.

• 5.6 We note that in paragraph 10.1 the external peer review records that “We believe that the information in AR32, together with other supporting documentation, is sufficient for any reader to obtain a full understanding of the valuation”. In our opinion this is not a suitable way to assess whether the report communicates the information fairly as, in general, we do not recognise the provision of a full understanding of actuarial processes as a purpose of actuarial reviews.

• 5.7 The external peer review does not include communication improvements in its 6 core recommendations. In our view, we would have expected this to be included.

6. Comments on recommendations made

• 6.1 The external peer review makes 6 recommendations (11 less than the 17 made in the last review). The nature and scope of the recommendations made by the reviewers are reasonable and in the spirit of supporting the Chief Actuary with further improvement. We have not carried out an independent assessment of any of the specific recommendations made by the external peer review.

• 6.2 Recommendations 3 and 6 relate to emerging contextual trends, namely longer working lives and climate-related factors. We agree that these are important areas to continue monitoring and that these are areas where developments could have material impacts on the future finances of the CPP.

• 6.3 Recommendation 5, in effect, repeats a recommendation from the AR31 (recommendation 14 of the external peer review of AR31). We agree that more focus on combinations of sensitivity analyses with specific combinations of plausible alternative assumptions may better help readers understand the risks the CPP faces. As the OCA notes, we also recognise that caution should be exercised when seeking particular sets of assumptions to determine scenarios where contribution rates would be at a particular level. We agree that such “back-solving” can be unhelpful if the necessary combinations of assumptions underlying these scenarios do not reflect plausible future outcomes.

• 6.4 Recommendations 1, 2 and 4 are more technical in nature than the other 3 recommendations. These 3 recommendations are all reasonable. When assessing the necessity of taking forward these recommendations we would encourage consideration of the materiality of the data, methodologies and assumptions adopted and proportionate communication.

7. Limitations and compliance

• 7.1 This letter has been carried out in accordance with the relevant Technical Actuarial Standard: TAS 100 issued by the Financial Reporting Council (FRC). The FRC sets standards for actuarial work in the UK.

• 7.2 This letter has been prepared for the OSFI for the purpose stated in this letter. The information and advice in this letter should not be relied upon or assumed to be appropriate for any other purpose.

• 7.3 We understand that OSFI will publish this letter. Any person or third party making a decision which places reliance on this letter should consult GAD on the suitability of this letter for supporting the decision being made. Third parties should be encouraged to seek their own actuarial advice where appropriate. GAD has no liability to any person or third party for any act or omission taken, either in whole or in part, on the basis of this letter.

Yours sincerely,

Chris Morley
Government Actuary’s Department (UK)
Chartered Actuary (Fellow) of the Institute and Faculty of Actuaries (UK)