The Canadian Association of Pension Supervisory Authorities is establishing a new committee with a mandate to develop a risk management guideline for pension plans.
The committee has been established in response to the International Monetary Fund’s call to regulators to strengthen their oversight of large pension plans and gain a greater understanding of vulnerabilities in the system, according to a press release.
“Good risk management is a key characteristic of a well-run pension plan and an important part of protecting members’ benefits,” it said. “By having an adequate system for managing risks, plan administrators are better positioned to keep pension plan assets safe and protect the plan from adverse risks.”
The guideline will aim to establish a pension risk framework that can be adapted to a plan’s unique characteristics, said the CAPSA, noting it will cover a way to evaluate, rate and prioritize risks facing the plan based on their magnitude — likelihood of happening against impact — and to establish mitigation strategies to manage the risks and take advantage of any opportunities that they may present.
The CAPSA plans to establish an industry working group to refine the guideline in the spring of 2022, prior to publication for public consultation.