Good afternoon, Mr. Chairperson, honourable members of the committee. Thank you for the opportunity to appear before you today.
The Office of the Chief Actuary is an independent unit within the Office of the Superintendent of Financial Institutions. It offers a range of actuarial valuation and advisory services to the Government of Canada. While I report to the Superintendant of Financial Institutions, I am solely responsible for the content and actuarial opinions reflected in the reports prepared by my office.
As part of its mandate, my office conducts statutory actuarial valuations on the pension plans covering the federal public service, the Canadian Armed Forces, the Royal Canadian Mounted Police, federally appointed judges, and your own pension pan, the plan for members of Parliament.
These actuarial valuations are conducted every three years, or whenever an amendment is made that has a significant impact on the financial status of a plan. The purpose of these actuarial valuations is to determine the financial position of the plans and to assist the President of the Treasury Board in making informed decisions regarding the financing of the government's pension benefit obligations. The actuarial assumptions used in the actuarial valuations are determine independently by the office and they represent the office's best estimate.
The assumptions are revised every time a new valuation is performed based on economic trends and demographic experience. The actuarial valuations are conducted in accordance with accepted actuarial practice in Canada.
We had seen remarkable gains in life expectancy. Back in 1965, the average life expectancy at age 65 was another 15 years, so people were expected to live until 80, with women living slightly longer than men. Today retirees at age 65 can expect to live for another 20 years on average, again with women living slightly longer.
If we project into the future, taking into account future assumed mortality improvements, that is, further future gains in life expectancies due to decreasing mortality rates, we could expect an additional three- to four-year gain in life expectancy at age 65. These expected future mortality improvements are embedded in our actuarial evaluations of these pension plans. If the future improvements in mortality were not taken into account, the total actuarial liability of the three largest public sector pension plans—the public service, the Canadian Forces, and the RCMP—as of March 31, 2013 would be reduced by $7.7 billion, or 3.4%. In other words, in the liabilities already in the reports there's a provision of $7.7 billion for future mortality improvements.
In closing, I am pleased to quote the 2014 spring report of the Auditor General of Canada:
We found that the Secretariat, National Defence, and the RCMP respected the independence of the Chief Actuary.
Thank you for the opportunity to appear before this committee. I would be very pleased to answer any questions you might have.