InfoPensions - Issue 27 - November 2022
InfoPensions includes announcements and reminders on matters relevant to federally regulated private pension plans including pooled registered pension plans. To receive email notifications of new items posted to OSFI’s website, including this newsletter and other pension-related documents, please subscribe using Email Notifications.
If you have any questions about the articles you read in InfoPensions or if you have suggestions for future articles, please contact us at pensions@osfi-bsif.gc.ca. We expect to publish the next issue of InfoPensions in May 2023.
For general enquiries, including pension-related questions, please contact us at information@osfi-bsif.gc.ca. If you prefer to contact us by telephone, by fax or by mail, please refer to the contact information on OSFI’s website.
Table of contents
Guidance and legislative matters
CAPSA publishes consultation documents
In June 2022, the Canadian Association of Pension Supervisory Authorities (CAPSA) published the following documents for stakeholder consultation on their website:
- CAPSA Guideline: Cyber Risk for Pension Plans
- CAPSA Guideline: Environmental, Social and Governance Considerations in Pension Plan Management
- CAPSA Guideline: Leverage and the Effective Management of Associated Risks
- Consultation on proposed approach to Risk Management Guideline
The consultation period closed on October 14, 2022. OSFI will be working with CAPSA to finalize each guideline.
OSFI consultation paper: Pension Investment Risk Management
In October 2022, OSFI published a letter to all federally regulated pension plan (FRPP) administrators and pension industry stakeholders to provide a summary of the feedback received on OSFI’s Pension Investment Risk Management consultation paper.
We received submissions from 20 respondents, including plan administrators, industry and professional associations and interested organizations. We thank you for your valuable input. OSFI shared the feedback received with its colleagues from the Canadian Association of Pension Supervisory Authorities (CAPSA) on a non-attributed basis. We will continue to collaborate with CAPSA to develop guidance on setting principles for the management of investment risk.
Guideline B-13 - Technology and Cyber Risk Management
In July 2022, OSFI released Guideline B-13 - Technology and Cyber Risk Management (Guideline B-13). While Guideline B-13 sets out OSFI’s expectations for how federally regulated financial institutions should manage technology and cyber risks such as data breaches, technology outages and more, many of the principles in the guideline may apply to federally regulated pension plans. This guideline could be a good reference for plan administrators until the work on the Canadian Association of Pension Supervisory Authorities (CAPSA) guideline is completed.
In June 2022, CAPSA published its draft guideline on Cyber Risks for Pension Plans for consultation and the consultation period ended on October 14, 2022. OSFI will continue to work with CAPSA towards finalizing guidance on this initiative.
Draft Guideline B-15 - Climate Risk Management
In May 2022, OSFI released its draft Guideline B-15 - Climate Risk Management for federally regulated financial institutions, for consultation. This draft guideline did not reference pension plans. In June 2022, the Canadian Association of Pension Supervisory Authorities (CAPSA) published its draft guideline on Environmental, Social and Governance Considerations in Pension Plan Management for consultation and the consultation period ended on October 14, 2022. OSFI will continue to work with CAPSA on this topic and will assess whether additional OSFI guidance is needed in this area once the CAPSA guideline is finalized.
Proposed revisions to Guideline E-23 on Model Risk Management
In May 2022, OSFI announced it will expand the scope of Guideline E-23 Model Risk Management to address emerging risks and to clarify OSFI’s expectations that all federally regulated financial institutions (FRFIs) and federally regulated pension plans (FRPPs) appropriately assess and manage model risks at the enterprise level.
Stakeholders were asked to provide input on the expanded scope of application and models along with any other element of the current Guideline E-23 where additional detail or greater clarity would be beneficial. We thank those who have submitted comments.
OSFI plans to launch a consultation on Guideline E-23 in mid-2023, targeting implementation in 2024.
Culture Risk Management Guideline - Update
In May 2022, the consultation closed on an OSFI letter seeking comments on how culture risks can affect federally regulated financial institutions (FRFIs) and federally regulated pension plans (FRPPs). OSFI received a total of 22 submissions, including 3 submissions from pension plan stakeholders.
In consideration of the feedback received, OSFI has decided to develop a draft guideline that will only apply to FRFIs. OSFI expects to publish this draft guideline for consultation in early-to-mid 2023.
Basic rate for assessment of pension plans
The Assessment of Pension Plans Regulations require the Superintendent to publish annually in the Canada Gazette, Part I, a notice setting out the basic rate that will be applied to the assessment of pension plans in the upcoming fiscal year.
This notice was published on September 24, 2022 and the basic rate in effect for assessments that are invoiced by OSFI for plan years ending between October 1, 2022 and September 30, 2023 is $11. This represents a $1 increase from the basic rate that is currently in effect and results in an increase of $50 to the minimum assessment amount (from $500 to $550) and $20,000 to the maximum amount (from $200,000 to $220,000). The basic rate applies to all pension plans registered under the Pension Benefits Standards Act, 1985 and the Pooled Registered Pension Plans Act.
Please refer to the Pension Plan Assessment Rate Schedule on our website for more information.
Since April 1, 2019, administrators are no longer required to calculate their own plan assessment. OSFI determines the assessment due for a pension plan and sends an invoice after the due date of the plan’s Annual Information Return (AIR) or, where applicable, after having received an application for registration. OSFI typically prepares the invoice approximately 45 days after determining the assessment, e.g., approximately 45 days after the due date of the AIR. This year, there have been some unexpected delays and we thank all administrators for their patience.
Please continue to wait to be invoiced rather than sending payment for the assessment along with an application for registration or after filing the plan’s AIR.
Guidance posted on OSFI’s website
The following documents were posted to OSFI’s website since the last edition of InfoPensions:
- October 2022 - Letter summarizing feedback received and next steps on OSFI’s consultation paper, Pension Investment Risk Management.
- September 2022 - draft Instruction Guide for Asset Transfers related to Defined Contribution Provisions of Pension Plans and its accompanying form. The consultation period ends on November 29, 2022.
- August 2022 - draft Instruction Guide on Buy-in Annuity Products. The consultation period ended on October 14, 2022.
- August 2022 - Instruction Guide for the Registration of a Defined Benefit Pension Plan and its accompanying application form (PDF, 453 KB). Revisions reflect the 2020 Agreement Respecting Multi-Jurisdictional Pension Plans and include other updates to clarify the instructions for completing the application form.
- August 2022 - Instruction Guide for the Registration of a Defined Contribution Pension Plan and its accompanying application form (PDF, 422 KB). Revisions reflect the 2020 Agreement Respecting Multi-Jurisdictional Pension Plans and include other updates to clarify the instructions for completing the application form.
- May 2022 - Letter regarding Proposed Revisions to Guideline E-23 on Model Risk Management.
- May 2022 - Letter regarding OSFI’s expectations for the Canadian Dollar Offered Rate (CDOR) Transition. This letter sets out OSFI’s expectations for federally regulated financial institutions (FRFIs) and federally regulated private pension plans (FRPPs) with respect to transactions linked to the CDOR and transition to the new alternative reference rates in Canada, prior to the respective cessation dates in June 2024.
Actuarial
Revision to the Instruction Guide for the Preparation of Actuarial Reports for Defined Benefit Pension Plans
In November 2022, OSFI issued the Instruction Guide for the Preparation of Actuarial Reports for Defined Benefit Pension Plans (Actuarial Guide) to reflect OSFI’s updated expectations regarding the maximum going concern discount rate and revised expectations due to the update to Part 3000 of the Canadian Institute of Actuaries Standards of Practice.
In accordance with the Actuarial Guide, the best estimate rate of return on assets used in the determination of the going concern discount rate should not exceed a certain level so that the assumption used by actuaries in their actuarial reports remains fit for purpose. OSFI has determined that the discount rate for a plan with a fixed-income allocation of 50% should not exceed 6.00%, before implicit margins for adverse deviations and expenses.
The updated version of the Actuarial Guide applies to actuarial reports with a valuation date on and after December 31, 2022.
Regulatory filings and important dates
Important reminders and dates
Annual filings and plan amendments must be filed using the Regulatory Reporting System (RRS).
Documents in support of an application for plan registrations must be submitted by email to Approvals-Approbations@osfi-bsif.gc.ca. All other documents in support of an application that require the Superintendent’s authorization must be filed using RRS. For additional information including instruction guides for filing an application using RRS, please visit the Amendments, Applications and Approvals section of OSFI’s website.
Under the Pension Benefits Standards Act, 1985:
| Action or required filing | Deadline |
|---|---|
| Annual Information Return (OSFI 49) and Schedule A - Canada Revenue Agency Information Requirements (OSFI 49A) | 6 months after plan year end |
| Pension Plan Annual Corporate Certification (PPACC) | 6 months after plan year end |
| Certified Financial Statements (OSFI 60), Auditor’s Report Filing Confirmation (ARFC) and, if required, an Auditor's Report | 6 months after plan year end |
| Payment of Plan Assessments | Upon receipt of the OSFI-issued invoice |
| Annual statements to members and former members and their spouses or common-law partners | 6 months after plan year end |
| Amendments to documents that create or support the plan or pension fund | Within 60 days after the amendment is made |
| Action or required filing | Deadline |
|---|---|
| Actuarial Report and Actuarial Information Summary and, if required, Replicating Portfolio Information Summary | 6 months after plan year end |
| Solvency Information Return (OSFI 575) | The later of 45 days after the plan year end or February 15 |
Under the Pooled Registered Pension Plans Act:
| Action or required filing | Deadline |
|---|---|
| Pooled Registered Pension Plan Annual Information Return (includes financial statements) | April 30 (4 months after the end of the year to which the document relates) |
| Auditor's Report | April 30 (4 months after the end of the year to which the document relates) |
| Pension Plan Annual Corporate Certification (PPACC) | April 30 (4 months after the end of the year) |
| Payment of Plan Assessments | Upon receipt of the OSFI-issued invoice |
| Annual statements to members and their spouses or common-law partners | February 14 (45 days after the end of the year) |
Other topics
OSFI’s Blueprint for Transformation - Update
As previously communicated in InfoPensions 26, OSFI launched a Blueprint in the fall of 2021, to guide the overall direction and transformation of the organization through to 2025.
OSFI’s 2022-2025 Strategic Plan is the next step in OSFI’s transformation. It sets out OSFI’s goals and priorities for the next three years, outlining the actions we will take to better contribute to confidence in Canada’s financial system. The Strategic Plan is built on three foundational elements: mandate, risk appetite and culture. The Strategic Plan brings OSFI’s transformation to life by providing a framework to build alignment and guide decision-making.
In April 2022, a new top-level organizational structure for OSFI was put in place, and that resulted in changes for OSFI’s Private Pension Plans Division (PPPD).
This new organizational structure will leverage the expertise, knowledge and resources of our colleagues on the financial institutions side by regrouping similar activities within each sector. While we continue to set the foundation for our transformation and determine how best to position ourselves in a rapidly changing risk environment, we are committed to continue delivering on our core business activities and help support continued resilience in the face of a complicated risk environment.
We are not expecting significant changes in how we regulate and supervise pension plans, rather we are hoping to better position ourselves with the appropriate expertise and internal structure to continue to deliver on our mandate in an increasingly complex risk environment.
Supervision Sector
Effective April 2022, OSFI moved the pensions Supervision, Actuarial and Systems teams to the Supervision Sector at OSFI. The Supervision Sector includes the supervision of federally regulated financial institutions and pension plans and Ben Gully is the Deputy Superintendent of this sector. In terms of staff responsible for federally regulated pension plans:
- Henri Boudreau assumed the role of Managing Director, Insurance and Pensions in June 2022.
- Benoit Brière is continuing in the role as Director, Pension Supervision.
- Kim Page assumed the role of Director of the new Reactive Monitoring and Onsite Group (RMOG) in October 2022. Kim previously held the role of Director, Policy and Approvals, in PPPD. The RMOG is a specialized unit that uses data and analytics in its supervision of entities (banks, insurers and pension plans).
- Effective in November 2022, Jean-François Lussier is the new Senior Manager, Pension Actuarial. This position was previously held by Marc Sauvé, who retired from OSFI in July 2022.
Policy, Innovation and Stakeholder Affairs
In April 2022, OSFI moved the pensions Policy and Approvals teams to the Policy, Innovation and Stakeholder Affairs (PISA) Sector. Tolga Yalkin is the Assistant Superintendent of this sector. In terms of staff responsible for federally regulated pension plans:
Pensions Policy team
- Effective in November 2022, Isabelle Lepage is the new Managing Director of Legislative Policy, Interpretation and Compliance.
- Claire Ezzeddin assumed the role of Senior Manager, Pension Policy in October 2022. She will be working closely with Theresa Hinz, Managing Director, Prudential Policy and Strategic Policy Liaison who assumed the role of Primary Member for the Canadian Association of Pension Supervisory Authorities (CAPSA) in coordinating OSFI’s work on CAPSA initiatives.
- Natalia Uscinowicz was appointed as Manager, Pension Policy in October 2022.
Pensions Approvals team
- Susan Lucas was appointed as Managing Director, Approvals in November 2022.
- Bryce Anderson was appointed as Manager, Pension Approvals in October 2022.
As we continue to support our transformation efforts, further organizational changes are expected. We will keep you informed.