Office of the Superintendent of Financial Institutions

Office of the Superintendent of Financial Institutions

April 15, 2010 15:30 ET

OSFI Releases Estimated Solvency Ratio (ESR) for Federally Regulated Private Pension Plans

OTTAWA, ONTARIO--(Marketwire - April 15, 2010) - The Office of the Superintendent of Financial Institutions (OSFI) has released the results of its latest solvency testing of federally regulated defined benefit private pension plans.

As part of its regular monitoring activities, every six months OSFI estimates the ratio of plan assets to plan liabilities for the close to 400 defined benefit plans it regulates. OSFI follows up with individual pension plans where the results raise potential concerns.

Our most recent estimates show that the average ratio has increased modestly to 0.90 at December 2009. An indicator that has shown a more marked improvement is the proportion of materially under-funded plans. Based on OSFI's estimates, at the end of 2009, only 15 per cent of all federally regulated pension plans had a solvency ratio of less than 0.80, whereas at the end of 2008, the comparable proportion was 40 per cent.

"While there are some signs that the economy is strengthening, private pension plans will continue to face challenges," says Judy Cameron, Managing Director of OSFI's Private Pension Plan division, in an appearance today before the House of Commons Finance Committee. "The strong investment returns that pension plans earned in 2009 have been offset to some degree by the effects of very low interest rates on plan solvency liabilities."

The private pension plans subject to OSFI regulation currently represent seven per cent of all private pension plans in Canada, accounting for approximately 12 per cent of private pension assets.

The Office of the Superintendent of Financial Institutions is an independent agency of the Government of Canada, established in 1987 to contribute to the safety and soundness of the Canadian financial system. OSFI supervises and regulates federally registered banks and insurers, trust and loan companies, as well as private pension plans subject to federal oversight, to ensure they are complying with their governing legislation.

Related: Remarks by Judy Cameron, Managing Director of OSFI's Private Pension Plan division, in an April 15, 2010 appearance before the House of Commons Finance Committee:

http://www.osfi-bsif.gc.ca/app/DocRepository/1/eng/speeches/jcfina_e.pdf

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