OSFI has developed its Risk Assessment Framework for Federally Regulated Private Pension Plans (Framework) and accompanying Guidance Notes and has provided them here in order to enhance transparency of our supervisory methodology for pension plans subject to the Pension Benefits Standards Act, 1985 and the Pooled Registered Pension Plans Act. The following are key features of this methodology:
- It is risk-focused, meaning that the degree of supervisory activity will generally be commensurate with the net risk in a plan. This permits efficient use of resources to supervise the plans that OSFI regulates.
- It identifies four significant activities that cover the operations of all pension plans: administration, communication to members, actuarial and asset management.
- It involves a separate evaluation of the inherent risks and the quality of risk mitigants in respect of the four significant activities as well as the risks associated with the plan’s solvency and funding.
- It puts the onus on plan administrators to administer plans in compliance with the regulatory framework.
The Framework documents the key elements of the process, but does not necessarily address all the supervisory activities and actions that OSFI might exercise with respect to a specific plan. In addition, OSFI may not follow all the actions or processes described in the Framework in every situation. The Guidance Notes supplement the Framework and were developed as a resource tool that OSFI uses to assist in making consistent risk assessments