FAQs

When dealing with a deposit-taking institution, such as a bank or trust company, there is a complaint mechanism process consumers should follow. The first step is to discuss the issue with the branch manager. If unsatisfied, the next step is to contact the head office of the financial institution. A contact name and telephone number may be obtained by contacting the Financial Consumer Agency of Canada (FCAC), the organization handling consumer complaints about their financial institution.

Following are answers to questions OSFI receives most frequently concerning federally regulated financial institutions or pension plans. If you have an unanswered question, please contact our Communications and Public Affairs division by:

Toll-free telephone: 1-800-385-8647; in the Ottawa area, the number is (613) 943-3950.

Hours of operation: 8:30 a.m. – 6:00 p.m., Eastern Time, Monday through Friday.

Facsimile: (613) 990-5591
E-mail: extcomm@osfi-bsif.gc.ca

ABOUT OSFI

Q. How many people does OSFI employ?
A. OSFI employs some 400 full-time staff for its regulatory functions. About 58 per cent of these people are involved in front-line supervisory activities, 22 per cent are involved in supervisory support functions and 20 per cent fulfill corporate services functions. In addition, 25 people manage OSFI's responsibilities relating to government pensions.

Q. Is OSFI part of the Government?
A. OSFI is an independent agency of the Government of Canada. It reports to the Minister of Finance.

Q. How is the Superintendent of Financial Institutions selected?
A. The Superintendent of Financial Institutions is appointed by the federal Cabinet for a seven-year term.

PENSIONS/RRSPs

If your pension plan is one of the over 1,200 private pension plans that are covered by federal regulations, you may contact OSFI for assistance and an officer will be able to provide you with the name and phone number of the plan administrator.

Pension questions received by OSFI tend to be technical and specific to an individual's situation, and are handled on a case-by-case basis. A list of private pension plans under federal jurisdiction can be found in the Who We Regulate section of OSFI's website. All other private pension plans in Canada are provincially regulated. Useful information on pensions is also contained in the Pension Guide for Members of Federally Regulated Private Pension Plans (Adobe Acrobat Reader is required).

Q. I am presently experiencing financial difficulties. I would like to have access to my pension funds but I have been told that the funds are locked in. How can I access my funds?
A. The PBSA does NOT allow access to locked-in funds due to financial difficulties at any time. If your pension funds were transferable when you terminated employment, then it is possible to purchase an immediate life annuity or a Life Income Fund (LIF) at any time with the funds in your locked-in RRSP.

Q. When does my pension plan money become locked in?
A. While you are a member of a pension plan your money and entitlement are locked in. If you cease membership in the plan, the PBSA requires as a minimum that your pension money be locked in if:

• For service after 1986 you have two years of membership in the pension plan.
• For service prior to 1987 you are 45 years of age and have 10 years of employment or plan membership.

Q. Can I use my locked-in registered retirement savings plan (RRSP) as collateral for a loan?
A. No. The Pension Benefits Standards Act, 1985 (PBSA) and its Regulations prohibit an assignment, making a charge against, anticipating or using your locked-in RRSPs, including using your RRSP as a security. Any transaction attempting to do so is void.

Q. Can I remove the growth/interest from my defined contribution (money purchase) pension plan when returns on my mutual fund investment account are high?
A. No. You cannot remove the principal and interest while a member of a pension plan. If after two years you cease to be a member, both the principal and interest are locked in.

Q. If I declare personal bankruptcy, can my pension be seized by my creditors?
A. No. A pension benefit cannot be seized as long as it remains in a pension plan or in a locked-in vehicle such as a locked-in RRSP. Once you begin receiving a regular pension benefit payment (pension), creditors may have access to that income.

Q. Can a creditor force me to use my federal locked-in RRSP to pay off my debts?
A. No. However, if you choose to convert your funds to a Life-Income Fund (LIF), or to purchase an immediate life annuity, the monthly or annual payments could be seized by a creditor.

Q. Can social services/welfare force me to convert my federal locked-in RRSP to a LIF and use my annual payment to reduce my social assistance payments?
A. No.

Q. Can a pension plan file an actuarial report with an effective date other than at the plan's year-end?
A. The effective date of actuarial reports should be at the plan's year-end, unless OSFI has approved an alternate date. Please refer to PBSA Update No. 18, article number 5. OSFI will accept an actuarial report prepared at an alternate date if the report is filed as a result of an amendment that changes the plan's liabilities or contribution requirements. OSFI will also accept an actuarial report, with an effective date earlier than the required plan year-end, when the report is filed for the purpose of increasing the current contributions to the plan. Under these circumstances, the regular year-end actuarial report must also be filed at the required date.

This policy is in line with OSFI's mandate of protecting the rights and interests of plan members and beneficiaries.

Q. Are pension plans allowed to operate in a deficit position?
A. Yes. Federal pension legislation allows a pension plan to operate in a deficit position.

Pension plan administrators must submit valuation reports to OSFI at least every three years indicating the funded status of the plan. OSFI has the authority to ask for valuation reports at any time, in the event that doing so appears warranted. This is generally the same approach followed by provincial pension regulators.

If a valuation report indicates that a plan is under-funded on plan termination basis, the administrator must fund the plan by making special payments over a five-year period. As well, an under-funded plan is required to file a valuation report every year until the plan no longer has a deficit.

Q. Why are pension plans allowed to operate in a deficit position?
A. The Pension Benefits Standards Act, 1985, recognizes that pension plans may at times find themselves in deficit positions as a result of a variety of factors such as benefit increases, changes in actuarial assumptions resulting in actuarial losses to the fund, and downturns in the financial markets. These deficits may be too high for sponsors to absorb in one short and ultimately discourage benefit improvments. That is why the legislation allows for plans to run deficits with the proviso that the plan sponsor make up the shortfall within a period of five years. At the same time OSFI's policy is to require the submission of annual valuation reports until the deficits are funded.

Q. Can I unlock small amounts when I leave my pension plan?
A. Your pension plan may provide for the unlocking of small amounts as an optional provision. Check with your plan sponsor when you are terminating from your plan. If your annual pension benefit payable is less than 4% of the YMPE for the calendar year in which you cease to be a member your plan may provide for the pension benefit credit to be paid out.

Q. Can I unlock small amounts from my RRSP?
A. No. The regulations governing RRSP's currently to not provide for the unlocking of small amounts from RRSP's.

Q. Who is required to provide information to me on my pension plan? Do I have to make an access to information to the OSFI for this information?
A. The plan sponsor is required by law to provide members and former members with certain information concerning your pension plan. You should not have to make an access to information request to the OSFI for information concerning your pension plan.

Q. What information about my pension plan am I entitled to receive as member or former member (pensioner or retiree)?
A. Information Provided to Plan Members:

Members and their spouses or common-law partners are entitled to information about their pension plan and their pension entitlements. It is the duty of the administrator to provide this information in a timely way.

Information That the Administrator Must Provide

• Pension plan booklet
• Personal annual statement — must be provided within six months of the plan's year end
• Retirement statement — must be provided within 30 days of a member's retirement
• Termination statement — must be provided within 30 days of termination
• Survivor benefit statement — must be provided within 30 days of notice of death

A retiree is not defined as a member of a pension plan under the Pension Benefits Standards Act however paragraph 28.(1)(c ) provides that each member and former member of the plan, every other person entitled to pension benefits (retirees) or refunds under the plan and their spouses may, once in each year of the operation of the plan, either personally or by an agent authorized in writing for that purpose, examine the documents or information filed with the Superintendent under certain sections of the Act and Regulations.

Information the Administrator Must Disclose on Request

A member, a former member, a retiree and their spouse or common-law partner, any person with entitlements under the plan, or an authorized agent of any of these, may request or review certain documents held by the administrator, including the following:

• Annual information returns;
• Financial statements, including plan expenses;
• Actuarial reports;
• Plan text;
• Plan amendments; and
• Statement of Investment Policies and Procedures

Documents must be made available for inspection at least once in a calendar year. This information must be made available where the member is employed or at a mutually agreed upon place. The administrator may charge a reasonable fee for photocopies.

Please refer the Pension Guide for Federally Regulated Pension Plans for general information an Administrator must provide or disclose on request to a member, former member, retiree and their spouse or common law partner. PBSA Update, Issue No. 17 summarizes the changes made in 1998 to the disclosure requirements of the Act. Both documents are available on the OSFI website www.osfi-bsif.gc.ca.

Q. What is the maximum amount of money I am allowed to take out of my Life Income Fund (LIF) under the Pension Benefit Standards Regulations?

A. Section 26 of the Pension Benefits Standards Act, 1985 (PBSA) gives pension plan members the opportunity, upon ceasing membership in the plan - but before becoming eligible to retire and draw a pension - to transfer the value of that pension to another pension plan or a "Retirement Savings Plan", as defined in the PBSA Regulations. This option is also available to a member's survivor, in the event of the member's death.

Section 19.1 of the Regulations states that a Retirement Savings Plan, into which a pension benefit credit can be transferred, is a Life Income Fund or a Locked-in Registered Retirement Savings Plan.

The rules underlying the LIF (described in Section 20.1 of the Regulations) require that the former plan member, in whose name it has been initiated, draw income from it until the time when it must be wound up (no later than age 80), with the proceeds being used to purchase an annuity.

The periodic income from the LIF is subject to minimum and maximum limits. The maximum limit is defined in Section 20.1 of the Regulations, and is intended to prevent members from exhausting their funds, so that the proceeds at wind up will allow for the purchase of a life annuity.

The "LIF Maximum Payment Amount Table" provides users with values representing fractions of the fund, which may be drawn during the year by former plan members whose pension benefit credits have been transferred to a LIF. OSFI will update the table annually, using the prevailing applicable Canadian Socio-economic Information Management (CANSIM) interest rate (B14013).

Life Income Fund: LIF Maximum Payment Amount Table

Note: Where this information conflicts with the Pension Benefits Standards Act ("PBSA"), 1985, or Regulations (PBSR), the PBSA or PBSR will govern.

Interest rate assumption used in the table:

In determining the maximum limit applicable to the income from a LIF in a given year, the rules underlying the LIF require the following interest assumption:

1. The CANSIM B14013 rate in effect during the preceding month of November for the first 15 years, and
2. 6.00% for the years remaining to the end of the year in which the LIF owner attains 90 years of age.

The CANSIM B14013 rate for November 2005 was 4.20%. Therefore, the maximum limit applicable to income to be drawn from any federally-regulated LIF during 2006 is determined according to the following interest assumption:

1. 4.20% for the first 15 years, and
2. 6.00% for the years remaining to the end of the year in which the LIF owner attains 90 years of age. (Assumption to age 90 is for the purpose of maximum payment calculation only. The balance of a LIF must be used to purchase a life annuity by the end of the year in which the LIF owner attains 80 years of age. )

Percentages shown must be prorated for the initial fiscal year if less than twelve months. Part of a month is treated as a full month.

2006 Maximum Annual Payment Amount Table for an OSFI Life Income Fund (LIF)

This table has 4 columns:

1. Age at January 1, 2006
2. New age during 2006
3. Years to end of year age 90 is attained
4. Maximum payment as a percentage of the LIF balance as at January 1, 2006.

FINANCIAL INSTITUTIONS

Q. Is my financial institution safe? Can I obtain information about its profitability and rating?
A. In general, Canada enjoys one of the most advanced and well-administered financial systems in the world. However, if you have specific questions about the safety of your financial institution, we would be happy to direct you to an individual at the relevant institution who can address your specific questions. Because of the legislation governing OSFI's activities, we cannot discuss details of the financial condition of individual financial institutions.

Sometimes individuals or entities will claim to operate as financial institutions regulated in Canada when in fact they are not. For this reason, OSFI publishes warning notices to alert the public to the names of such entities.

Q. What is a federally regulated financial institution?
A. For OSFI, a federally regulated financial institution is any entity (public or private corporation, subsidiary, or branch) that has been created or allowed to offer financial services pursuant to one of the financial institution statutes proclaimed by the federal government. Banks, for example, are incorporated or registered under the Bank Act, while insurance companies — both life companies as well as property and casualty insurers - are incorporated or registered under the Insurance Companies Act. Both Acts specify a number of "dos and don'ts" that govern the activities of these institutions in the public interest.

Q. Where can I obtain the history / incorporation documents for a federally registered financial institution?
A. A written request should be sent to the attention of Mr. Luc Morin, Access to Information, Office of the Superintendent of Financial Institutions, 255 Albert Street, Ottawa, Ontario, K1A 0H2. Telephone: (613) 990-7495. The request may be faxed to (613) 952-5031. Please note that fees apply to such requests.

SCAMS

Q. I responded to an advertisement for guaranteed loans and was told that my loan application will be approved, as long as I make a fee payment in advance. Is this sort of transaction normal?
A. Classified advertisements for loans do not guarantee that the company is legitimate. It is important to establish that the loan is being offered by a reputable loan broker. Some companies claim they can guarantee you a loan even if you have a bad credit history or no credit rating at all. They usually request an up-front fee. If you send your money to these companies, it is unlikely that you will get your promised loan and your advance fee payment will be at risk. Persons with poor credit ratings are usually the key targets and once the ‘loan processors' receive your money, the fraudsters usually disappear. Applications for loans should be processed through legitimate financial institutions.

Q. I've received a letter from someone in Africa wanting to transfer money into my bank account, all I have to do is pay some wire transfer fees and I will get a percentage. Should I pay these fees?
A. Watch out for the Nigerian Business letter scam! For years now, businesses, learning institutions, and government departments have been receiving e-mails from senders posing as Nigerian government or business officials offering to share large sums of money. The Royal Canadian Mounted Police estimates Canadians have lost about $30 million to the scam over the last ten years and reports that about 10,000-15,000 letters pushing variations of this fraud from Nigeria have circulated in Canada. Please forward Nigerian/African letters to wafl@phonebusters.com. The Phonebusters National Call Centre ('PNCC') is a joint partnership involving the Ontario Provincial Police (OPP) and the Royal Canadian Mounted Police (RCMP). The PNCC is very interested in receiving copies of Nigerian letter scheme, particularly those involving Canadian mailing addresses or telephone numbers. This valuable intelligence information is used to assist in targeting fraudsters.

MONEY LAUNDERING

Q. What is money laundering?
A. The laundering of the proceeds of crime (or money laundering) is the process whereby "dirty money", produced through criminal activity, is transformed into "clean money", making the criminal origin difficult to trace. Criminals do this by disguising the sources, changing the form, or moving the funds to a place where they are less likely to attract attention.

Q. How is OSFI involved in deterring and detecting money laundering?
A. OSFI works closely with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), and shares information concerning the policies and procedures that Canadian financial institutions have in place for complying with Part I of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). Recently adopted provisions of the PCMLTFA and the Criminal Code give FINTRAC and OSFI the responsibility for dealing with issues related to the financing of terrorist activities. FINTRAC's objectives now include the detection, prevention and deterrence of the financing of terrorist activities, while OSFI has assumed the role of a central reporting point for the aggregate reporting requirements outlined in subsection 83.11(2) of the Criminal Code.

TERRORISM

Q. How is OSFI involved in the suppression of terrorism? A. OSFI provides Canadian financial institutions and foreign branches operating in Canada a list of terrorist entities. The institutions are required to review their records on a continuing basis for the names of persons or organizations covered by the regulations under the Criminal Code and/or by the United Nations Suppression of Terrorism Regulations (UNSTR) and to report their findings on a monthly basis to the relevant regulator, which in the case of federally regulated financial institutions is the Office of the Superintendent of Financial Institutions (OSFI).

Q. How are the lists of terrorist names and/or entities developed?
A. The process of listing begins with criminal and/or security intelligence reports on an entity disclosing the reasonable grounds to believe that the entity has knowingly carried out, attempted to carry out, participated in or facilitated a terrorist activity; or the entity is knowingly acting on behalf of, at the direction of or in association with an entity involved in a terrorist activity. If the Governor-in-Council is satisfied that there are reasonable grounds to believe that the above test has been met, the entity may be placed on the list of terrorist entities. The listing of an entity is published in the Canada Gazette. The definition of an entity includes a person, group, trust, partnership or fund, or an unincorporated association or organization.

Q. How do Canadian financial institutions report their findings to OSFI?
A. In order to keep reporting requirements as streamlined as possible, OSFI requires federally regulated financial institutions to file only one monthly aggregate report (OSFI 525) even though names may be listed under both the regulations made under the Criminal Code and/or the United Nations Suppression of Terrorism Regulations (UNSTR) .

CIVIL SERVICE INSURANCE ACT

OSFI no longer administers portions of the Civil Service Insurance Act. For information about the Act, please contact Human Resources Development Canada and toll-free at 1-800-958-7833.

EXCISE TAX ACT

OSFI no longer administers Part 1 of the Excise Tax Act. For information about the Act, please contact Canada Customs and Revenue Agency, and toll-free at 1-800-959-5525.