Bonjour.
My name is Jim Christie and I am the president of the Canadian Institute of Actuaries, the CIA. We appreciate the opportunity to discuss our thinking on a few areas where actuarial skills, talents, and abilities can help government in the coming budget year and into the future.
With me today is Michel St-Germain, a pension expert, who may answer any questions you may have on our views of pooled registered pension plans.
While PRPPs will not be game changers in retirement savings, they are an interesting option for retirement planning. To have a significant impact, we believe that PRPPs need to be subject to simple, efficient, and harmonized rules across the country. We believe that PRPPs should be optional rather than mandatory and that they should be regulated as a form of tax registered retirement savings vehicle rather than through a patchwork of federal and provincial pension legislation. This could be done by adding a separate section to the Income Tax Act similar to those existing for RRSPs.
I'll now comment on how actuaries can contribute to health care. The world is undergoing incredible change, and at a pace that is accelerating. Planning assumptions have been seriously challenged and will continue to be tested into the future. Many countries have failed to adequately take into account changing demographics and market conditions, and they are now paying a price for their neglect by coping with social benefit structures that have become unstable.
Risk is the chance that undesirable events will occur, but risk is also an opportunity. We all know that the future is uncertain and full of risk, and this is precisely where the actuarial toolkit and our deep training can be so helpful in health care. These types of things—risk management, demographics, and forecasting—are items that actuaries do well. We believe that government could use this expertise. Basically, actuaries are risk professionals. We analyze, assess, evaluate, and manage the financial impact of risk and uncertainty. We're experts in evaluating the likelihood of future events and we design innovative ways to reduce the probability of undesirable events happening, and we also suggest how to mitigate the impact of adverse events should they occur. Using our strong analytical skills, business knowledge, and understanding of human behaviour, we can help manage the complex risks facing health care in Canada.
Here are some specific things that actuaries can bring to the health care system. First, projecting forward the financial impact of risk and uncertainty is one of our cornerstore skills. We already do this in insurance and pensions. Our work reflects our expertise in demography, compensation, and benefits. We believe the current projections in health care are often tailored to shorter-term goals and that actuaries, with their longer-term focus, can better identify risks and trends in health care.
Second is planning for the future, in particular the aging population that faces us. In typical budgets, costs are projected to change by specific amounts. Actuaries can lay out scenarios that expose what will happen to budgets if different changes in costs actually happen. We can also quantify what to expect if pieces of the puzzle are tweaked.
Third is working with poor or non-existent data. Often, decision-making comes to a halt because of missing data and information. Actuaries have the capacity to develop conclusions and to get work done in spite of information gaps. As more and better data become available, we develop new scenarios that explain available options and allow better decisions. We handle random fluctuations in plans and results by developing methods for coping with adverse deviations and by creating appropriate margins for the future.
Fourth is modelling. Along with our deep training in mathematics, modelling is a core skill of the profession. It is a key part of what actuaries can bring to health care.
Fifth, actuaries are experts at working within a team. You'll find actuaries in insurance companies, in pension plans, in the energy field, among government regulators, in employment insurance, and in workers' compensation. We are also leaders in the emerging field of enterprise risk management, helping manage risk throughout organizations.
Sixth, actuaries belong to a profession. There is a broad and deep body of knowledge that actuaries have mastered. There is a professional organization, the CIA, that accredits our training and awards our professional designations. Actuaries adhere to standards of practice generated by an independent actuarial standards board. We have firm targets for continuing professional development that each actuary must meet annually. The actuarial profession also maintains and enforces a comprehensive disciplinary process. So actuaries are well educated and highly ethical professionals who are current with best practices.
You are no doubt familiar with the work of the office of the chief actuary within the Office of the Superintendent of Financial Institutions. The chief actuary brings rigour, insight, and professionalism to bear on the Canada Pension Plan, public sector pensions, and social programs.
Canadians deserve the same type of advice in health care.