Private Pension Plans Division A Review of by ipr10496

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									        Office of the Superintendent of Financial Institutions Canada
A&CS                  Audit and Consulting Services                                 A&CS
              Review of Pensions Planning Activities and Processes




          Private Pension Plans Division

                           A Review of

        Planning Activities & Processes
                     and
       2006-07 Business & Priorities Plans




                           October 18, 2006




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              Office of the Superintendent of Financial Institutions Canada
A&CS                        Audit and Consulting Services                                 A&CS
                    Review of Pensions Planning Activities and Processes



                                        Contents


1.     Background

2.     Review Objectives

3.     Review Scope

4.     Outline of Evaluation Criteria

5.     Review Methodology

6.     Review Observations and Assessment

7.     Conclusions and Recommendations

8.     Management Response and Action Plan


Attachment 1 – Pensions Planning Framework

Diagram 1 – Integration of OSFI & PPPD Planning Process




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                Office of the Superintendent of Financial Institutions Canada
A&CS                           Audit and Consulting Services                                 A&CS
                       Review of Pensions Planning Activities and Processes

1. Background

The Pensions Planning Activities and Process review is a scheduled review in the Audit and
Consulting Services (A&CS) 2006/07 Audit Plan.

The Office of the Superintendent of Financial Institutions Canada (OSFI) safeguards
private pension plan members by enhancing the safety and soundness of federal regulated
private pension plans (Plans) through risk assessment, intervention, rule making and
approvals related to Plans under the Pension Benefits Standards Act, 1985. As outlined in
OSFI’s Plan and Priorities 2006-2009, the financial and economic environment for Plans is
deteriorating, low interest rates and changes to actuarial standards have added to solvency
deficits and plans continue to generate considerable concern. The aging population in
Canada and other jurisdictions ensures that pension issues have a high profile. This
environment creates challenges for OSFI in meeting its mandate to regulate and supervise
private pension plans. OSFI’s resources are being simultaneously called to contribute to
changes in pension rules, while dealing with complex pension approvals.

Because of the importance of OSFI’s Private Pension Plans Division (PPPD) in meeting its
pensions’ mandate, the Superintendent asked A&CS to review the PPPD’s planning
activities and processes, and their alignment with OSFI’s corporate plan as part of OSFI’s
continuing commitment in improving operations.

Pensions objectives as described in their Risk Register, May 2006:

    ‘Supervision:   Accurate and risk-based risk assessments of pension plans, timely and
                    effective intervention and feedback.
       Approvals:    A prudentially effective and responsive approvals process.
       Rule-Making: Balanced, relevant regulatory framework, including Policy:
                    Legislation and regulation policy and external guidance’.

Pensions planning activities & processes (framework and guidance)

Our review of the Division’s planning activities and processes and related priorities, and
their alignment with OSFI plans was a collaborative effort. The Division and A&CS
worked closely in reviewing the Division’s planning activities and processes, and
documents. These activities and processes documented in a ‘Pensions Planning
Framework’, attachment 1, and related documents were accumulated in one planning folder
/ binder.

Division’s planning framework is organized into four phases: planning inputs; analysis,
assessment & prioritization; plan development; and communications and approval. The
following is a brief overview of them.

Planning inputs: The Division gathers information from: OSFI’s Plans & Priorities
document; action plans responding to an external pension survey; a comprehensive list of
the Division’s current projects / initiatives; and prior year’s planning information. This



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               Office of the Superintendent of Financial Institutions Canada
A&CS                           Audit and Consulting Services                                 A&CS
                       Review of Pensions Planning Activities and Processes

information is reviewed by management as to its accuracy and completeness. This
information is then used in the next phase.

 Analysis, assessment & prioritization: Risk assessment, and management and staff
prioritization workshops are conducted and the results are circulated to the Division’s
management and staff. Managers are assigned responsibility for preparing key planning
documents: risk register; priority projects & initiatives current year and forward; HR and
training plans; budget submission. In addition, the Managing Director and the management
team meet with staff to discuss the Division’s plans and priorities, and to ensure goal
commitment documents incorporate relevant plans and priorities.

The priority projects and initiatives are identified as being either PPPD-wide or pertaining
to a particular client service (supervision, rule making, approvals). For each item, a priority
ranking (high, medium, or low) is assigned, a project lead is named, key milestones are
identified and due dates are set.

Plan development: Planning documents prepared in the analysis, assessment and
prioritization phase are used to develop Division budget, HR and training, and project
plans. These documents are reviewed by the Deputy Superintendent, and related
information provided to the Director, Strategic Planning & Performance Measurement as
input to OSFI planning, and are used in the Executive plans and priorities retreat.

Communications and approval: The managers meet to review the planning documents and
confirm their respective responsibilities. There is a special staffing briefing on the
Division’s plans and priorities regarding the upcoming year’s plans. The final plan
documents are provided to the Deputy Superintendent.

2. Review Objectives

The purpose of the review was to review and comment on:
! Pensions planning activities and processes (Pensions Plan Framework) in
  developing an annual and multi-year business and priorities plan.

!   The degree to which Pensions’ 2006-07 plan addresses identified priorities and
    risks and aligns with OSFI’s corporate plans and priorities;

!   The degree to which the Pensions’ planning activities and processes are
    incorporated into OSFI’s corporate planning activities and processes.

3. Review Scope

As this was a framework / guidance review, it was high level in scope and included:
! Planning activities and processes followed in developing the 2006- 07 plan.
!   Pensions’ 2006-07 business and priorities plan.
!   Alignment of Pensions’ 2006-07 plans with OSFI’s 2006-07 plan and priorities.
!   Planned improvement in 2007-08 planning activities and processes.



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                Office of the Superintendent of Financial Institutions Canada
A&CS                            Audit and Consulting Services                                   A&CS
                        Review of Pensions Planning Activities and Processes

Outside of the scope of the review was an assessment of the underlying input, judgement
and decisions made in developing Pensions’ 2006-07 plans. As appropriate, the Review
provides the foundation for such an assessment

4. Outline of Evaluation Criteria

Outline of planning framework criteria

The criteria described in the following table sets out the elements and related components
of the criteria used in assessing the Pensions framework and guidance. These criteria were
developed in consultation with the Division.


  Criteria Element                                Criteria Components

 Governance              !   A process for management oversight over the development and
                             approval of the business plan exists.
                         !   A process for management involvement, review and approval of
                             the business plan and priorities exists.
                         !   A process for monitoring business plans and updating as
                             appropriate the business plan exits.


 Objective setting       !   Pensions strategic and operational objectives and priorities are:
                             o Defined and documented;
                             o Aligned with OSFI strategic and corporate objectives and
                                priorities; and
                             o Cascade down to Pensions business line / activity objectives
                                and priorities.


 Operating               !   Responsibilities and the accountability & reporting structure are
 environment                 established.
                         !   OSFI’s risk and risk tolerance framework is incorporated into the
                             business plans and priorities.
                         !   Business conditions are identified and assessed in:
                             o Degree and recentness of change;
                             o Complexity of operations;
                             o Legislative and other requirements;
                             o Degree of knowledge of staff and corporate knowledge
                                 (memory); and
                             o Degree of dependencies on others in achieving objectives and
                                 priorities.


 Information & inputs    !   Input is sought from external and internal sources through
                             environment scans, self-assessment, workshops, industry
                             consultation and discussions with clients and industry
                             representatives.
                         !   Issues / concerns / challenges are identified, at the corporate,
                             division & business lines level.


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               Office of the Superintendent of Financial Institutions Canada
A&CS                          Audit and Consulting Services                                 A&CS
                      Review of Pensions Planning Activities and Processes


  Criteria Element                              Criteria Components

 Risk management       !   Pension inherent risk is identified and assessed consistent with
                           OSFI’s ERM framework;
                       !   The significance of Pensions in achieving OSFI’s mandate and
                           strategic objectives is defined and assessed.
                       !   The degree to which Pensions may be exposed to public scrutiny
                           is identified and assessed.


 Planning process      !   A plan process by phases exists including:
                           o Pensions strategic and business line / activities objectives and
                              related priorities;
                           o Risk identification and assessment;
                           o Summary and detail Pensions plan, by operations and
                              priorities (work breakdown structure);
                           o Performance measurement aligned with business objectives
                              and priorities;
                           o Resource management including capacity, resource
                              requirements and resource allocation;
                           o Scheduling of short and long term plans, years one and two by
                              quarters (work breakdown by timelines); and
                           o Management review and approval of the business plan.


 Communications        !   There is ongoing and transparent communication within Pensions
                           and with management and other interested groups, in and outside
                           OSFI.
                       !   Planning information / corporate memory is captured, maintained,
                           and accessible as needed.


5. Review Methodology

The review was conducted according with the Institute of Internal Auditors’ International
Standards for the Professional Practice of Internal Auditing, consistent with the Treasury
Board Policy on Internal Audit.

Interviews were held with the Division’s management team and staff, the Director,
Strategic Planning and Performance Measurement, and the Deputy Superintendent
responsible for the Division.

There was review of the Division’s planning activities and processes, and supporting
documents; and planning analysis and reports. As an observer, Audit and Consulting
Services attended the Division’s management planning session in February 2006.

The following observations, assessments and recommendations are based on the above
mentioned discussions and documentation reviews. OSFI’s Audit Reporting Protocol was
followed for this review.



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                                                 Office of the Superintendent of Financial Institutions Canada
A&CS                                                          Audit and Consulting Services                                                            A&CS
                                                       Review of Pensions Planning Activities and Processes

6. Review Observations and Assessment


       Framework Criteria                                                 Observations & Assessment                                       Recommendation1
      Elements / Components

      Governance                    1. The Division follows the OSFI Planning Cycle and Corporate Planning processes and is               2. Broaden
                                       provided with guidance and timelines.                                                                 PPPD
      1. A process for              2. Division’s planning documents such as risk assessment, projects & priorities, and budgets are         planning to a
         management                    shared and reviewed within the Division, and are reviewed by the Deputy Superintendent.               multi-year
         oversight over the         3. During the review period, the Division formalized and documented its planning activities,             period
         development and               processes and supporting documents. Refer to Attachment 1 – Pensions Planning Framework,
         approval of the               and established a planning folder / binder of planning documents.
         business plan exists.      4. The Managing-Director, PPPD, meets with the Deputy Superintendent on the Division’s plans
                                       and participates in the Sector and cross-sector priority and planning meetings and other
      2. A process for                 planning activities.
         management                 5. The Executive holds a meeting to set strategic direction, and business & project priorities. The
         involvement, review           resulting OSFI plans and priorities document is used as key input into the Division’s planning.
         and approve of the         6. As part of their mid-year 2006/07 review, the Division introduced a ‘Work Planning and
         business plan and             Tracking’ analysis of transaction volumes and work effort requirements (capacity) as well an
         priorities exists.            ‘Examination Planning Cycle’ capacity analysis and forecasting for its Supervisory work. A
                                       similar analysis of Policy volumes has been completed, and a review of Approval and Special
      3. A process for                 Project volumes and capacity are being conducted or are planned. We support those initiatives
         monitoring business           as central tools for assessing operational needs and for monitoring and reporting on operations
         plans and updating as         and developing multi-year plans.
         appropriate the            7. Generally, the Division plans and priorities have focused on the upcoming year but, for
         business plan exits           2007/08, the Division has introduced a ‘super-projects’ category focusing on most important
                                       projects that provide a multiyear forward view of operational and high priority initiatives.
                                       These initiatives include the PBSA System Review (internal processing of work), Supervisory
                                       Framework Review (internal supervisory practices), Improving the Approvals Processes,
                                       Issuing Select External Guidelines. Planning is being broadened to a multi-year planning
                                       period on these and selected other projects.
                                    8. A multi-year plan with supporting documents is being introduced for 2007/08 planning as the
                                       primary tool for review, approval, monitoring and revising the Division’s plans and priorities.
                                       The Division’s planning documents, such as analysis and assessment of transaction volumes,
                                       staffing needs, project priorities, are also used for OSFI planning purposes.

1
    Refer to Section 7. Overall Conclusions and Recommendations for a description of the recommendations in detail

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                                        Office of the Superintendent of Financial Institutions Canada
A&CS                                                 Audit and Consulting Services                                                           A&CS
                                              Review of Pensions Planning Activities and Processes


   Framework Criteria                                            Observations & Assessment                                       Recommendation1
  Elements / Components
                             9. These initiatives are important in the Division to provide direct timely input into OSFI
                                planning activities.

  Objective setting          1. The Division’s mandate and objectives are specifically stated in the OSFI Act and are
                                incorporated into the OSFI strategic plan.
  1. Pensions strategic      2. The Division has recently been restructured into separate supervision, approval and policy
     and operational            groups with specific business objectives, plans and priorities for each group.
     objectives.


  Operating environment      1. The Managing-Director, PPPD reports directly to the Deputy Superintendent.
                             2. The Division adheres to the requirements of OSFI’s Planning guidance and requirements.
  1. Responsibilities and    3. The Division’s management team and staff are involved in planning activities and workshops.
     the accountability &       Planning activities and resulting priorities are assigned to specific individuals.
     reporting structure
     are established.        4. OSFI’s corporate risk profile and the Superintendent’s guidance on OSFI’s risk tolerance are
                                incorporated into the Division’s risk assessment of operations. The Division’s risk assessment
  2. OSFI’s risk and risk       is input into OSFI’s assessment of office-wide risks and setting of key priorities.
     tolerance is
     incorporated into the   5. In assessing its business conditions, the Division gathers broad information from varied
     business plans and         sources, including (1) OSFI’s strategic plan and priorities, (2) internal research on pension
     priorities.                emerging issues, (3) input from stakeholders including associations and a public consultation
                                survey, (4) internal workshops and (5) meetings with senior management.
  3. Business conditions     6. Division planning includes an assessment of the operating environment, and business
     are identified and         conditions and their impact on the Division’s plans and priorities.
     assessed.


  Information & inputs       1. In developing its business plan, the Division gathers information from various sources to        1. Strengthen the
                                ensure a broad understanding of objectives, priorities, challenges and needs. This information      identification
  1. Input is sought from       is incorporated into the analysis and assessment activities / workshops.                            & assessment
     external and internal   2. As outlined in the Pensions Planning Framework, Attachment 1, the Division conducts staff,          of capacity
     sources through            risk, and management workshops in gathering planning information and prioritization of              volumes &
     environment scans,         operations and projects work.                                                                       resource
     self-assessment,        3. The Division prepares a high level a profile of its work requirements and related staff             requirements

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                                          Office of the Superintendent of Financial Institutions Canada
A&CS                                                   Audit and Consulting Services                                                             A&CS
                                                Review of Pensions Planning Activities and Processes


   Framework Criteria                                              Observations & Assessment                                         Recommendation1
  Elements / Components
     workshops, industry          resources. To better assess its capacity to meet current and forward looking work
     consultation and             requirements, the Division should track transactions / volumes, and staffing and contracting
     discussions with             resource requirements (capacity) to ensure current and ongoing needs are incorporated into the
     clients and industry         Division’s strategic and operation plans.
     representatives.          4. As outlined under the “Governance” criteria, the Division has undertaken two initiatives to
                                  improve information gathering on operations and prioritization of projects and initiatives in
  2. Issues / concerns /          assessing its capacity to manage current and anticipated future volumes.
     challenges are
     identified, at the
     corporate, division &
     business lines level.


  Risk management              1. Annually, the Division conducts a risk workshop and prepares a detailed risk report.               1. Strengthen the
  1. Pension risk is           2. OSFI’s corporate risk profile and the Superintendent’s guidance on risk tolerance are input into      identification
     identified and               the Division’s risk workshop.                                                                         & assessment
     assessed consistent       3. The environmental and operational information is incorporated into the Division’s risk                of capacity
     with OSFI’s ERM              assessment exercise. The planning process is interactive as the results of one activity or            volumes &
     framework;                   workshop is used in other activities or workshops.                                                    resource
                               4. As outlined under the “Information & Inputs” criteria, strengthening the identification and           requirements
  2. The significance of          assessment of the Division’s capacity to process current and future volumes of business is
     Pension in achieving         important in achieving operational objectives and in achieving OSFI’s strategic pensions’
     OSFI’s mandate and           mandate. This information is also important input determine the Division’s risk profile.
     strategic objectives is   5. Based on interviews and a review of its risk register, it appears the Division’s risk
     defined and assessed.        identification and assessments are thorough and are reflected in specific Division projects and
                                  initiatives to mitigate risks.
  3. The degree to which       6. The importance and public visibility of the pension environment is reflected in the Division’s
     Pension may be               and OSFI’s plans.
     exposed to public
     scrutiny is identified
     and assessed.




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                                          Office of the Superintendent of Financial Institutions Canada
A&CS                                                   Audit and Consulting Services                                                                A&CS
                                                Review of Pensions Planning Activities and Processes


   Framework Criteria                                              Observations & Assessment                                           Recommendation1
  Elements / Components

  Planning process             1. During the period under review, the Division formalized and documented its planning activities       1. Strengthen the
                                  and processes, and gathered the planning documents into one planning folder / binder. The               identification
  1. A plan process by            Background section of this report describes the Division’s planning processes while                     & assessment
     phases exists                Attachment 1 - Pensions Planning Framework lays out the phases and activities followed. The             of capacity
     including:                   parts shown in ‘orange’ indicate areas where improvements are recommended.                              volumes &
  ! Pension strategic and      2. Extensive information was gathered and used in assessing operational needs & project                    resource
     business line /              priorities, and in briefing staff, managers and senior management on the Division’s plans. The          requirements
     activities objectives        identification of risk and issues as well setting of current priorities appears to be thorough and
     and related priorities;      appropriate.                                                                                         2. Broaden
  ! Risk identification        3. The key planning activities followed includes:                                                          PPPD
     and assessment;               o A risk self-assessment and prioritization of operational needs and emerging issues;                  planning to
  ! Summary and detail             o An evaluation of the results of an external pension survey;                                          multi-year
     Pension plan, by              o The identification and prioritization of operational projects and initiatives;                       period
     operations and                o Management and staff workshops and meetings; and
     priorities;                   o Briefing meetings with Division management and staff.                                             3. A
  ! Performance                4. Generally, the Division’s plan focused on the upcoming year (2006/07). For major projects,              summarization
     measurement aligned          such as developing new pension processes and related IT systems, initial planning information           of the
     with business                is gathered. Planning information on operations and projects needs to take a forward looking            Division’s
     objectives and               view.                                                                                                   plans &
     priorities;                                                                                                                          priorities is
  ! Resource                   5. This year, the Division introduced an analysis and assessment of future volumes and staffing            needed.
     management                   requirements. We support those initiatives.
     including capacity,       6. The Division now identifies ‘super-projects’, for example: supervision practices review, and
     resource                     enhancing approvals processes; issuing external guidance; and development of supporting IT
     requirements and             systems. In identifying ‘super projects’, the Division ensures these projects are incorporated
     resource allocation;         into mid to long term plans.
  ! Scheduling of short        7. A document summarizing the Division’s plans would facilitate communications within the
     and long term plans,         Division and assist senior management in overseeing the Division’s plans and priorities. Such
     years one and two by         information would include top projects and initiatives (the “super-projects’), HR and staffing
     quarters; and                requirements, top risks, and milestones. This information could be incorporated into OSFI
  ! Management review             “business plan summary” and “project plan summary” documents as well quarterly reporting to
     and approval of the          the Executive.
     business plan.



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                                      Office of the Superintendent of Financial Institutions Canada
A&CS                                              Audit and Consulting Services                                                              A&CS
                                           Review of Pensions Planning Activities and Processes


   Framework Criteria                                         Observations & Assessment                                           Recommendation1
  Elements / Components

                          8. As a collaborative effort, PPPD and Audit & Consulting Services worked together to introduce
                             improvements into the Division’s 2006/07 and 2007/08 planning exercise. The Division has or
                             has undertaken improvements such as:
                             ! Established a structured documented planning process, refer to Attachment 1 – Pensions
                                 Planning Framework.
                             ! Introduced a planning document folder / binder (electronic and hard copy) for keeping and
                                 maintaining planning information for each phase (planning inputs; analysis, assessment &
                                 prioritization; plan development; communications & approval).
                             ! Introduced aids and tools for tracking volume and staffing requirements and in assessing
                                 the Division’s capacity to manage current and anticipated volumes.
                          9. With a documented planning process, the decision making and approval points are clearly
                             identified. In addition, the planning framework facilitates the sharing of planning information.

                          10. As part of our review of the Division’s planning framework, we gathered information and
                              documents used for OSFI planning purposes. The Division submits documents such as a risk
                              register, project and initiatives priorities, a HR plan and budget information The Division has
                              meetings with the Deputy Superintendent for planning purposes.
                          11. At a high level, Diagram 1 – Integration of OSFI & PPPD Planning Process shows how the
                              Division’s and OSFI’s planning activities and information are interlinked together.
                          12. As recommended, a document summarizing the Division’s plans & priorities would assist the
                              Division in laying out its overall plan including top projects and initiatives, top risks, HR and
                              staffing plans, resources and milestones.

                          13. Audit and Consulting Services has a planned review of OSFI planning activities and processes
                              (framework) in the 4th quarter 2006/07. This review will include an examination of the
                              interaction and sharing of information between the Sectors and groups such as the Pension
                              Division. This review report will be used as input in developing the plan for the OSFI planning
                              review.




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                                        Office of the Superintendent of Financial Institutions Canada
A&CS                                                 Audit and Consulting Services                                                           A&CS
                                              Review of Pensions Planning Activities and Processes


   Framework Criteria                                            Observations & Assessment                                      Recommendation1
  Elements / Components

  Communications            1. The Division’s staff and management involvement in planning activities including workshops       2. Broaden
                               and briefings are appropriate. Interviews with representative staff and managers indicate that      PPPD
  1. There is ongoing and      there is a good understanding of the Division’s operations and priorities.                          planning to a
     transparent            2. Most staff said that their goal commitment document for the upcoming year includes specific         multi-year
     communication             assignments related to the Division’s plans.                                                        year period
     within Pensions and    3. Some staff indicted that more detailed information about the Division’s plan and how it is
     with management and       reflected in OSFI’s strategic plan and priorities would be helpful. Staff also would like more   3. .A
     other interested          information on the Division’s looking forward plans.                                                 summarization
     groups, in and outside 4. Both recent and planned improvements in the Division’s planning processes will strengthen the        of the
     FI.                       documentation of the plan and supporting information.                                                Division’s
                                                                                                                                    plans &
  2. Planning information    5. The Managing-Director, PPPD, has meetings with the Deputy Superintendent throughout the             priorities is
     / corporate memory         planning process. With the introduction of a more detailed analysis and assessment of               needed.
     is captured,               planning information, a multi-year planning period, a summarization of the Division’s plans
     maintained, and            and priorities will strengthen communication within the Division and oversight / governance
     accessible as needed.      processes by Executives.




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                  Office of the Superintendent of Financial Institutions Canada
A&CS                          Audit and Consulting Services                                     A&CS
                      Review of Pensions Planning Activities and Processes



7. Conclusion and Recommendations

Our review of the Division’s planning activities and processes and related priorities, and their
alignment with OSFI plans was a collaborative effort at a time when the Division’s 2006/07
business and priorities plans were being finalized.

In the course of the review, the Division and Audit & Consulting Services documented the
planning activities and processes, developed information and analytical tools, and gathered
planning documents into a planning package. In addition, the Division has undertaken other
initiatives for the 2007/08 planning period to further develop its planning framework and
guidance.

As assessed against the review criteria, the Division’s planning activities and processes
incorporate many elements of a comprehensive planning framework in a satisfactory manner.
There are three areas where improvements are required. The areas for improvement are:

   1. Strengthen the identification & assessment of capacity volumes & resource
   requirements

   The Division’s planning framework should include detailed tracking of work volumes
   and resource requirements as a key input in developing its business plans. Such
   information is valuable in assessing staffing levels, and business system requirements.


   2. Broaden PPPD planning to a multi-year period

   The Division’s planning should incorporate a mid to long term planning projection such
   that operations and project / initiative priorities, and resource requirements are identified
   and planned on a longer term basis.

   For year one, detailed information on staffing needs, operations and project / initiatives
   priorities and related resource requirements would be developed. For year two and
   forward, high level information on priorities and resource requirements would be
   determined. This information is a key input into Division planning that in turn is a key
   input into OSFI’s strategic and business planning.


   3. A summarization of the Division’s plans and priorities is needed.

   The Division’s planning framework should incorporate a summarizing of the Division’s
   plans and priorities as key communication within the Division and in assisting the
   Executive in oversee of the Division’s plans and priorities. Such information would
   include top projects and initiatives (the “super-projects’), HR and staffing requirements,
   top risks, and milestones. This information could be incorporated into OSFI’s
   “business plan summary” and “project plan summary” planning documents as well
   quarterly reporting to the Executive.


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                   Office of the Superintendent of Financial Institutions Canada
A&CS                          Audit and Consulting Services                                     A&CS
                      Review of Pensions Planning Activities and Processes




   Such reporting assists the Deputy Superintendent and the Executive in overseeing the
   progress of the Division against their plan and in identifying emerging issues and
   opportunities for further improvement.

As described in section 6 of this report, these areas have been or are being addressed by the
Division. For example, the Division’s 2006/07 mid-year plan review includes forward
looking capacity volumes and staffing requirements, and information about top projects and
initiatives.

In addition to our review of the Division’s planning activities and processes, we reviewed the
Division’s risk and priorities for the 2006/07 planning period and consistency with OSFI’s
corporate plans and priorities. Based on our review of the Division’s and OSFI’s plans for
2006/07, and extensive discussions with Division staff, we found that the identification of the
Division’s risks and issues as well as setting of current priorities to be thorough and appropriate,
and are consistent with OSFI’s plans and priorities.


8. Management Response and Action Plan
PPPD is in agreement with the recommendations arising from this review of PPPD’s planning
activities and processes (framework). A number of initiatives were undertaken mid-cycle in
2006/07 to address these recommendations, specifically the introduction of multi-year planning
for selected projects and the preparation of a mid-year resource reforecast which measured both
capacity and resource allocation in selected areas. These initiatives will be further strengthened
for the upcoming 2007/08 planning cycle. We anticipate that these initiatives will be completed
by the 2nd quarter of 2007/08.

In addition, PPPD’s quarterly reporting to the Executive will include a more focused section on
PPPD’s operational risks and priorities and its relationship to planning and resource allocation.




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                                                                                    Office of the Superintendent of Financial Institutions Canada
A&CS                                                                                               Audit and Consulting Services                                                                                                  A&CS
                                                                                         Review of Pensions Planning Activities and Processes

                                                                                                                                                                  Attachment 1 – Pensions Planning Framework

Pensions Planning Framework : Information Flow / Four Phase Process
          Inputs (May)
        1. Planning




                                                                                                                                                                                                        1.4 Consolidation of
                                                                  1.1 OSFI Planning                                                                        1.3 PPPD Business Profile
                                                                                                                                                                                                           inputs / needs
                                                          direction / priorities / requirements               1.2 External Pensions                           (Mandate, Objectives,
                                         # 4.5                                                                                                                                                                      ,
                                                                                                                                                                                                       (operations projects,
                                                                      on Pensions                             Environment Analysis,                            KOB, Performance
                                         PPPD                                                                                                                                                               staffing, T&D,
                                                                 Mandate, Objectives,                           Including surveys                              & Risk Assessment,
                                                                                                                                                                                                         capacity volumes  ,
                                                                 Plans, Projects & Risk                                                                         Last Year’s Plan)
                                                                                                                                                                                                             resources)
  & Prioritization
   Assessment,




                                                        2.1 Analysis / Assessment
   2. Analysis,




                                                                                                                    2.2 Outcome                                                                             2.4 Output
                                                                                   )
                                                 (Staff, Risk & Management Workshops
                                                                                                              Preliminary Conclusions                         2.3 Pensions Management                        Proposed
                                (July)




                                                                   Risk                                                                                                                                                                     #2
                                                                                                                          &                                           Review &                              Operations
                                                                Operations                                                                                                                                                                 OSFI
                                                                                                               Operations / Projects                           Pensions Head Approval                            &
                                                                 Projects
                                                                                                                    Prioritization                                                                       Project Priorities
                                                          Resource Identification
     Development
                         (September)




                                                 3.1 Scope of the workfor 3 years                                3.2 Detail Year 1 Plan                                                  3.3 Output
       3. Plan




                                                          Work objectives                           (budget, projects, capacity, resource allocation)                               Draft Pensions Plan
                                                                                                                                                                                                                                #3
                                                       Definition of the work                                                &                                                       w Draft Multi-Year
                                                                                                                                                                                                                               OSFI
                                                      Resource requirements                                   High Level Years 2 & 3 Plan                                          Operations & Projects
                                                        Proposed timelines                                       (priorities, resources)                                       Priorities (PPPD & OSFI-wide)
     4. Communications




                                                                                                                                                                                                                                      # 3 fwd.
                                                  4.1 Management                                                                                                                                                                       OSFI
         & Approval




                                                                                                                                                                                            4.5 Implementation
                         (October)




                                                   & Staff Briefing                            4.2 Sector Head                                              4.4 Executive
                                                                                                                               4.3 Plan                                                         of the plans
                                             Pensions Plans & Priorities                           Review                                                      Review
                                                                                                                             revisions as                                                           and
                                               (strategies, objectives,                      Summary of Pensions                                        Summary of Pensions
                                                                                                                             appropriate                                                      integration with                         # 1.1
                                                      ,
                                            operations priorities – PPPD /                     Plans & Priorities                                         Plans & Priorities
                                                                                                                                                                                               OSFI Planning                           PPPD
                                                     OSFI-wide)




Parts shown in ‘orange’ indicates areas where improvements are recommended and the Division has completed or undertaken improvements.




                                                                                                                                                                                                                     Page 15 of 16
                     Office of the Superintendent of Financial Institutions Canada
A&CS                               Audit and Consulting Services                                                    A&CS
                        Review of Pensions Planning Activities and Processes

                                        Diagram 1 – Integration of OSFI & PPPD Planning Process



                           Integration of OSFI & PPPD Planning Process / Steps
          OSFI Planning Cycle                                             PPPD Planning

                                                   1. Planning Inputs / KOB

           1. Determine Risks                      1.1     OSFI & PPPD specific Risk
              to Objectives                        1.2     External PPPD Environment Analysis
                 (ERM)
                                                   1.3     PPPD Bus. Profile: KOB, Performance, Risk Assessment
                                                   1.4     Consolidation of inputs / needs: Operations, Projects,
                                                           Volumes, Resources


                                                   2. Analysis, Assessment, & Prioritization
           2. Set Priorities for                   2.1     Analysis / Assessment.: Risk Workshop, Projects &
             Planning Period                               Priorities (OSFI-wide & PPPD specific) Workshop,
                                                           Resource Identification
                                                   2.4     Output: Proposed Project Priorities



                                                   3. Plan Development / 4. Communications & Approvals

                                                   3.3     Output: Draft summary of PPPD plans & priorities w
               3. Project,                                 multi-year Operations & Projects Priorities (OSFI-wide &
          Business, HR & IM/IT                             PPPD specific)
                Planning                           4.2     Sector Head Review: Summary of PPPD plans and
                                                           priorities (Strategies, Objectives, Operations, Projects with
                                                           Resources, HR, IT/MT
       A&CS PPPD PLanning                          4.4     Executive Review: Summary of PPPD plans and
       Review                                              priorities




                                                                                                        Page 16 of 16

								
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