Canada’s Office of the Chief Actuary (OCA) has said it is “ready to conduct work on the 2-degree stress test” for the Canada Pension Plan (CPP), the country’s earnings-related social insurance program, and has made a request to Friends of the Earth to provide the relevant actuarial assumptions.
The OCA, which conducts risk and uncertainty analysis for the CPP – as well as the country’s Old Age Security programme, student loans programme and federal public-sector pension and insurance plans – made the comments earlier this year in a letter to the NGO, seen by RI.
Friends of the Earth Canada had contacted the OCA to ask it to conduct climate stress tests for the country’s pension plan as part of its duty to address future uncertainties and their impacts.
In the OCA’s reply, dated February 8, Chief Actuary Jean-Claude Menard points to a 2015 document which “examines the financial state of the CPP under alternative economic and demographic assumptions, as well as under financial market tail events”.
“In the interest of fostering informed public commentary on the CPP, the Chief Actuary has in the past responded to many requests to explain actuarial information and, in some circumstances, to do special actuarial work related to the CPP when time and resources made this possible,” he continued.
However, Canadian policy dictates that in some cases “a requestor may be asked to supply more information or specifications before the request can be serviced, e.g. where assumptions about existing or future demographic and/or economic conditions must be made that are not part of the assumption sets of statutory actuarial reports”.“In view of the above, I would like to inform you that the OCA is ready to conduct work on the ‘2-degree stress test’ as per the policy described above, once your organisation has provided us with the set of alternative actuarial assumptions describing the requested scenario,” Menard concludes.
A spokesperson for the OCA said it “didn’t receive any additional information” from Friends of the Earth. “Therefore we [have] no comment to make at this point.” Friends of the Earth also declined to comment on whether it planned to take its efforts forward.
One source told RI that Friends of the Earth Canada contacted the California Department of Insurance in May regarding the scenario analysis it had performed earlier this year relating to climate risk for the insurance industry. “Evidently, Friends of the Earth was responding to a request from the Chief Actuary of Canada to provide actuarial assumptions for a stress test on the CPP,” the source said, adding that no meeting ever took place.
The CDI – run by Dave Jones – did not confirm whether it was in discussions with Friends of the Earth or the OCA, but told RI that its scenario analysis and related models are explained on its website. The work was conducted with climate think-tank 2 Degrees Investing Initiative, which helped conduct similar scenario analysis with the Swiss government, looking at its pension industry.