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Section II – Analysis of Program Activities by Strategic Outcome

The following section describes OSFI’s program activities and identifies the expected results, performance indicators and targets for each of them. This section also explains how OSFI plans on meeting the expected results and presents the financial and non-financial resources that will be dedicated to each program activity.

2.1 Strategic Outcome – To regulate and supervise to contribute to public confidence in Canada’s financial system and safeguard from undue loss.

2.1.1 Program Activity: Regulation and Supervision of Federally Regulated Financial Institutions

Human Resources (FTEs) and Planned Spending ($ millions)
2009-10		2010-11		2011-12
FTEs	Planned Spending	FTEs	Planned Spending	FTEs	Planned Spending
289	48.6	289	50.7	289	52.5

Program Activity Expected Results	Performance Indicators	Targets
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%
Accurate risk assessments.	Percentage of knowledgeable observers who agree that their institution's Composite Risk Rating is appropriate.	70%
Timely and effective intervention and feedback.	Time to issue Supervisory Letter (within prescribed target days)	80% of letters are issued within 45 days
Regulations, guidance and other rules that balance prudential considerations and the need to compete.	Percentage of knowledgeable observers who rate OSFI as good or very good at developing regulations, guidelines and other rules that strike an appropriate balance between prudential considerations and the need for institutions to compete.	50%
Regulations, guidance and other rules which are clear and scrutinized by industry.	Percentage of knowledgeable observers who rate OSFI as good or very good at developing regulations, guidelines and other rules for industry that are clear and easy to understand. AND/OR Percentage of knowledgeable observers who rate OSFI as good or very good at consulting with industry on the development of regulations, guidelines and other rules.	75% 60%
Regulatory approval result in prudentially sound decisions that are transparent.	Percentage of knowledgeable observers who understand somewhat or very well the basis upon which OSFI makes its decisions as part of the approval process.	85%
Regulatory approvals which are timely.	Percentage of completed applications for regulatory approvals that are processed within established performance standards.	90%

Program Activity Summary

• Operate an effective prudential supervisory system by allocating resources to higher risk/impact institutions or activities.
• Conduct timely risk assessments and interventions and provide clear reports and recommendations to FRFIs.
• Recommend appropriate changes in FRFI practices and processes.  
• Communicate and consult effectively with financial institutions and the industry during the rule development process.
• Contribute effectively to international regulation and standard setting.
• Operate a timely, clear and transparent approvals process for legislative and non-legislative approvals. 

Planning Highlights

In order to achieve the expected result, OSFI plans to undertake the following activities:

• Continue to improve our ability to identify emerging risks via enhanced research and international intelligence, more focus on market information, and comparative reviews in key areas.
• Conduct a formal review of OSFI’s Supervisory Framework for continued appropriateness.
• Continue to participate in international discussions to identify and respond to the key issues arising from global economic events and developments in world financial markets, including future changes to regulatory approaches, and make recommendations for action.  Work with Financial Institutions Supervisory Committee (FISC) partners and the regulated industries on similar issues in the Canadian context, to strengthen communications and preparedness in light of the continuing market turbulence.
• Determine implications of accounting changes for Canadian financial institutions and supervisors. Develop a plan for addressing resulting changes to policies, process, data collection and reporting.
• Continue the development of implementation and risk management expectations for future improved risk-sensitive methodologies for Life insurers and P&C insurers.
• Revise the current Minimum Continuing Capital and Surplus Requirement (MCCSR) and the Minimum Capital Test (MCT) in light of the introduction of IFRS in 2011.
• Continue post-implementation review work for Basel II, including policy work to examine target capital policy for risk ratios, leverage multiple, standards for credit risk in the trading book and capital floors.

Benefits for Canadians

A properly functioning financial system, in which consumers and others (inside and outside Canada) have a high degree of confidence, makes a material contribution to Canada’s economic performance. OSFI is the primary regulator and supervisor of all federally registered financial institutions, numbering about 450. The achievement of OSFI’s strategic outcomes, which are shared by partners within government and the private sector, provides an essential foundation for a productive and competitive economy.

OSFI supports the government’s priority for a safe and secure world by contributing to the fight against terrorism financing and money laundering.  OSFI’s focus relates to guidance and, on behalf of Financial Transactions Reports Analysis Centre of Canada (FINTRAC), the supervisory review of the operation of financial institution programs to comply with anti-money laundering / anti-terrorism financing requirements.

2.1.2 Program Activity: Regulation and Supervision of Federally Regulated Private Pension Plans

Human Resources (FTEs) and Planned Spending ($ millions)
2009-10		2010-11		2011-12
FTEs	Planned Spending	FTEs	Planned Spending	FTEs	Planned Spending
27	4.8	27	4.6	27	4.7

Program Activity Expected Results	Performance Indicators	Targets
Protect the financial interests of federally regulated private pension plan members and beneficiaries.	Percentage of estimated recoveries on pension plans that have terminated under-funded.	85%
Regulations, guidelines and other rules which are clear and balanced.	Percentage of knowledgeable observers who rate OSFI as being good or very good at developing regulations, guidelines and other rules that are clear and easy to understand. AND/OR Percentage of knowledgeable observers who rate OSFI as being good or very good at developing regulations, guidelines and other rules that strike an appropriate balance between interests of plan sponsors and plan members.	75% 50%
Regulatory approvals which are timely and transparent.	Percentage of knowledgeable observers who rate the transparency, that is, the rationale for OSFI’s recommendations and decisions, of the Pensions Approvals process, as good or very good. AND/OR Percentage of completed applications for regulatory approvals that are processed within established benchmarks.	60% 90%

Program Activity Summary

• Conduct timely risk assessments and interventions and provide clear reports and recommendations to supervised plans. 
• Communicate and consult constructively and effectively with the pension plan industry during the development of regulations, rules and other guidance.
• Operate a timely, clear and transparent approvals process for private pension plans. 
• Work closely with the Department of Finance in the development of proposals for, and the analysis of, any changes to federal legislation that could impact federally regulated pensions.
• Monitor and determine the implications of court decisions affecting private pension plans. 

Planning Highlights

In order to achieve the expected result, OSFI plans to undertake the following activities:

• Develop and implement systems to support the revised pensions risk assessment framework.

Benefits for Canadians

OSFI supports the government’s priority for income security for Canadians. OSFI supervises some 1,330 federally regulated private pension plans in Canada, which cover 594,000 active members as at March 31, 2008.  OSFI works to promote responsible pension plan governance and actuarial practices.  OSFI’s actions and decisions affect plan members as well as the sponsors and administrators of the plans. 

2.1.3 Program Activity: International Assistance

Human Resources (FTEs) and Planned Spending ($ millions)
2009-10		2010-11		2011-12
FTEs	Planned Spending	FTEs	Planned Spending	FTEs	Planned Spending
5	1.7	5	1.7	5	1.7

Program Activity Expected Results	Performance Indicators	Targets
Emerging market economies are more informed about current approaches to regulatory and supervisory systems, and deploy them to the extent possible.	Percentage of respondents that rate the assistance / presentations provided as relevant to their work.	80%
Technical assistance (e.g., workshops, advice, on-site needs assessments)	Percentage of respondents who rate OSFI trainers as competent or highly competent.	90%

Program Activity Summary

• Provide technical assistance with on-site examination processes, legislative drafting, development /organization of supervisory agencies, risk-based capital regimes and improving supervision systems.
• Work to improve supervisory cooperation and coordination amongst supervisors.
• Assist selected jurisdictions in preparing their Financial Sector Assessment Program self-assessment.

Planning Highlights

In order to achieve the expected result, OSFI plans to undertake the following activities:

• Strategically concentrate its activities on a small number of target / partner countries.

Benefits for Canadians

OSFI supports the government’s priority for a safe and secure world through international cooperation.  Canada and other G-7 governments recognize that upgrading the supervisory capacity of emerging market supervisory authorities can enhance the stability of the global financial system. Canada plays an important role in this regard, in part through OSFI’s technical assistance program, which helps selected emerging market economies to improve the supervisory systems for their financial institutions in line with international banking and insurance supervisory standards.

2.2 Strategic Outcome – To contribute to public confidence in Canada's public retirement income system.

2.2.1 Program Activity: Office of the Chief Actuary

Human Resources (FTEs) and Planned Spending ($ millions)
2009-10		2010-11		2011-12
FTEs	Planned Spending	FTEs	Planned Spending	FTEs	Planned Spending
31	4.3	31	4.3	31	4.4

Program Activity Expected Results	Performance Indicators	Targets
Stewards of Canada’s public retirement income system are provided with professional actuarial services and advice in regard to the Canada Pension Plan (CPP) and federally legislated public pension and benefit plans.	Adequacy of professional experience of the Chief Actuary and his staff. AND/OR Compliance with Canadian and international professional standards.	Unanimous agreement Unanimous agreement
High quality actuarial valuations inform CPP and OAS stakeholders and Canadians of the current and projected financial status of the CPP and OAS.	Reviews are comprehensive (methods, assumptions, analysis) AND/OR Percentage of the recommendations within the scope and influence of the OCA that are implemented before the next peer review.	Unanimous agreement 80%
CPP and OAS Triennial Actuarial Reports	Timeliness of tabling in Parliament of Reports on Canada Pension Plans & Old Age Security.	100% by the deadline
Accurate and high quality actuarial valuations of Public Pension and Insurance Plans provided to departments to inform design, funding and administration of plans.	Reviews are comprehensive (methods, assumptions, analysis). AND/OR Actuarial opinion is appropriate.	Unanimous agreement Unanimous agreement
Public Sector Triennial Actuarial Reports	Timeliness of tabling in Parliament of Reports on Public Pension Plans.	100% by the deadline
Independent valuation of the Canada Student Loans Program informs the Departments of Finance and HRSDC of the future costs and provision rates of the program.	The OCA is the service provider of choice to HRSDC.	Annual renewal of the MOU with HRSDC
Actuarial Report on the Canada Student Loans Program	Timeliness of the Report on the Canada Student Loans Program provided to HRSDC.	100% by the deadline set by HRSDC

Program Activity Summary

• Provide high-quality and timely reports such as: triennial Actuarial Reports in respect of the Canada Pension Plan (CPP), the Old Age Security program, and federal public sector employee pension and insurance plans established under various acts. 
• Prepare actuarial reports that are tabled in Parliament in respect of the CPP, for example, when certain bills are introduced and when amendments are made to certain other public sector pension plans. 
• Undertake the actuarial review of the Canada Student Loans Program.

Planning Highlights

In order to achieve the expected result, OSFI plans to undertake the following activities:

• Tabling the Actuarial Report for the PSSA, PSDB, CF, CFDB and RCMP. 
• Hosting an International Social Security Association Conference in Ottawa in September 2009.

Benefits for Canadians

Canada has set in place a public pensions system that is expected to be sustainable and affordable well into the future in the face of changing demographic conditions.  While OSFI does not supervise public pensions, the Office of the Chief Actuary (OCA) does do statutory actuarial reports on various public pension programs, to come to conclusions about sustainability under certain assumptions. In this way, the OCA provides appropriate checks and balances on the future costs of the different pension plans and social programs that fall under its responsibilities.

2.3 Program Activity: Internal Services

Program Activity: Internal Services

Human Resources (FTEs) and Planned Spending ($ millions)
2009-10		2010-11		2011-12
FTEs	Planned Spending	FTEs	Planned Spending	FTEs	Planned Spending
139	40.7	137	41.9	137	42.7

Program Activity Expected Results	Performance Indicators	Targets
OSFI’s financial statements accurately reflect the financial position of OSFI.	OAG audit attests that OSFI's financial statements present fairly, in all material respects, the financial position of OSFI at the year-end and the results of its operations and its cash flows for the year in accordance with GAAP.	N/A
OSFI maintains or improves its strong performance on its Results-based Management Accountability Framework, (MAF) as assessed by Treasury Board from time to time.	Treasury Board’s next assessment of OSFI’s MAF indicates equal or improved ratings, including in the three areas where, in the last assessment, Treasury Board suggested a need to focus.	N/A
Operational units within program support are efficient and effective, i.e. deliver services at reasonable cost and turn-around time relative to peers. Operational units are operating within applicable acts, policies and guidelines	Treasury Board’s audits of OSFI, in the scope of its government-wide Horizontal Audits, confirm no material findings for OSFI. Internal Audits of reviewed units find that controls are in place and units are operating within applicable acts, policies and guidelines, and/or identifies areas for action.	N/A
A stable, committed and skilled workforce.	Knowledgeable observers are of the view that OSFI staff knowledge is good or very good. Voluntary turnover reports are satisfactory.  Employee Survey finds that OSFI employees are committed. The consolidated mean score of the Employee Survey has increased since the last survey.	N/A

Program Activity Summary

OSFI’s Internal Services program activity supports its two strategic outcomes.  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 to those provided specifically to a program.

Planning Highlights

In order to achieve the expected result, OSFI plans to undertake the following activities:

• Identify changing human resources requirements; ensure timely availability of staff; continue to allocate available resources to identified risk and priority areas; implement strategic development plans.
• By April 2009, develop long-term strategies for Information Management and Information Technology necessary to support our evolving supervisory and regulatory activities, and associated implementation road map. In conjunction, review and refine as required, OSFI’s existing governance processes supporting the conceptualization and prioritization of major IM/IT initiatives.

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