Why have the pension fees increased so much in the last two years?
The significant challenges faced by pension plans over the past several years have necessitated a general increase in regulatory attention and resource-intensive interventions in respect of specific problem plans. Although pressures showed signs of easing last year, ongoing vigilance is required. Furthermore, OSFI is dealing with an increasing number of pension-related court challenges and decisions, and the number of transactions and policy decisions requiring attention has not abated. As a result, OSFI cannot diminish its level of monitoring, supervisory and regulatory activity. At the same time, OSFI has embarked on a project to upgrade the systems that support its supervisory and approvals efforts, which has added to resource demands.
All of OSFI pension costs are charged back to plans directly (smoothed over five years). In the past, surpluses were recorded as actual spending was lower than planned. Initially, the accumulated surplus absorbed the impact of rising costs, and assessments could be kept lower. Past surpluses have now been consumed in this way, so significant fee increases are needed to fully recover current costs. OSFI closely monitors its spending and the implications for fees charged to pension plans. OSFI's pension fee rate is expected to remain at $24 in fiscal 2008-2009 based on current planning assumptions.
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