Pension Industry Must Bolster Bridges to Steel Against Uncertain Future: BCFSA Senior VP Nez Aquino

• Industry Communications

31 October 2025

In an uncertain global economy, B.C.’s and Canada’s pension plan industry must show resilience and strengthen its existing bridges to prepare for a future that may look very different from the past.

That was among the messages delivered October 30 by Nez Aquino, BCFSA’s Senior Vice President of Financial Institutions, during her keynote address to the Association of Canadian Pension Management B.C. Council’s “Pension Perspectives” forum.

BCSFA is working to help ensure that the pension system is well positioned to weather demographic and macroeconomic pressures and can continue serving Canadians during uncertain times through rigorous oversight, proactive risk management, and ensuring plan administrators are prepared for the future.

Read the full text of Aquino’s speech below.

Speech | Nez Aquino, October 30, 2025

Check against delivery.

Good afternoon, everyone. Thanks very much for the kind introduction.

We build bridges so that they are strong enough to carry the weight of generations.

And in many ways, our pension system is a bridge.

In the universe of pension plans, we each play our part in helping maintain that bridge, reinforcing it as new pressures arise so that everyone who crosses it, from today’s workers to tomorrow’s retirees—can trust it will hold.

That is what resilience looks like in our sector: strengthening the structure that connects us across time.

But as we know, Canada’s economy stands at an inflection point shaped not only by domestic realities but by a world in flux. Geopolitical tensions, shifting trade relationships, and the global transition to cleaner energy are redefining the landscape in which the entire financial system is operating. Supply chains are being re-wired.

Uncertainty has become a constant feature of the global economy. Businesses, small and large, are reluctant to hire or invest given this uncertainty; for example, we can’t ignore a growing risk: higher youth unemployment. Across Canada, many young people are struggling to gain their footing in the workforce. AI-related developments certainly played a role in that. Unemployment rate for 20- to 24-year-olds has persistently remained high, reaching close to nine per cent in September, the highest since 2010, excluding the peak COVID period. These young people are starting their financial journeys already at a disadvantage compared to their parents’ generation.

Combined with the high cost of living and inflationary pressures that we are facing, Gen Z is more likely to have a cautious outlook and mindset to saving and spending.

This creates a compounding challenge for pension plans: fewer young workers contributing, those who do contribute may be saving less due to financial constraints, and the gap between contributors and beneficiaries continues to widen.

This reality underscores why we need a resilient pension system now more than ever. While we cannot control macroeconomic trends, we can ensure that the pension system is positioned to weather these demographic pressures and continue serving Canadians through uncertain times. That means rigorous oversight, proactive risk management, and ensuring plan administrators are prepared for a future that may look different from the past.

BCFSA and B.C. Pension Plans

BCFSA understands the important role that resilient pension plans play in many Canadians’ long-term retirement goals.

You may have seen our latest Report on Pension Plans Registered in B.C. that went out last week. The data showed that overall, B.C. pension plans are well funded, having shown resiliency in navigating the past several years’ economic challenges, including existing and emerging risks.

At the end of 2024, there were approximately 1.3 million Pension Plan members here in B.C.

There are 610 pension plans managing $237.6 billion in assets, although the bulk of these assets is concentrated in a few of the larger and more complex plans.

In fact, seven out of the 610 plans make up 64 per cent of total plan membership and 81 per cent of total plan assets.

Also, trade uncertainties are imposing difficulties on some pension plan sponsors in certain industries, for example, in the forest industry. This impacts the sponsor’s ability or willingness to fund pension plans.

Given that backdrop, it is a strong outcome for the sector that as of our most recent projections, at June 30, 2025, estimated going-concern and solvency funded levels for benefit formula plans showed strong results. In aggregate:

• The median going-concern funded ratio: 139 per cent
• The median solvency funded ratio: 126 per cent

These numbers reflect both defined benefit and target benefit plans, which together represent over 90 per cent of plan members in B.C. This means that the majority of pension plan members are in plans that are currently well-funded and stable. While the numbers reflect the strength of the system, we can’t overlook the importance of continued vigilance and sound governance.

Balancing Risk in an Uncertain World

The strength of the pension segment rests on trust—trust that prudent management today will safeguard our pensions for tomorrow.

And that is why BCFSA has been sharpening its focus on risk, on the balance between stability and return, between today’s realities and tomorrow’s promises.

Managing risk is about ensuring endurance, so that promises made continue to be promises kept. One of our key priorities is to be more focused on emerging and existing risks, and to tailor our regulatory efforts accordingly.

In September 2024, CAPSA released its Guideline No. 10 on Risk Management for Plan Administrators. BCFSA relies on this guideline and references it in our interactions with plan administrators.

We aim to take a proactive and deliberate approach to understanding the steps that pension plans are taking to manage emerging risks such as cybersecurity and climate risk.

We also continue to monitor long-standing key risks such as funding, investment, governance, and plan sponsor risks.

Tiered system and the new Supervisory Framework

This year, BCFSA introduced a new Supervisory Framework which reflects our evolving approach to risk-based supervision and allows us to respond to risks quickly.

The previous pensions framework was published in 2014.

Since then, the segment has changed significantly.

We now have 100 fewer plans. A target benefit framework has been introduced and there have been updates to the Pension Benefits Standard Act. And of course, BCFSA was created in 2021.

The previous framework was heavily focused on defined benefit plans and in-depth supervisory risk reviews. We needed to evolve the framework to recognize all plan types such as Defined Contribution (DC) pension plans, for example, and focus more on the continuous monitoring of the pension plans.

Our new Pensions Supervisory Framework, which was released in April 2025, introduced a tiering system to assess each pension plan’s systemic impact on the economy at large. The higher the systemic impact, the higher the Tier Rating.

This helps our team apply a lens of proportionality to our supervisory work.

The Framework focuses on risks with the greatest detrimental impact on BCFSA’s mandate to safeguard the benefits of pension plan members and promote a properly functioning and stable segment.

We expect that our supervisory work under the new framework will be more aligned with:

• BCFSA’s mandate
• Recommendations made in the August 2025 Financial System Stability Assessment report released by the International Monetary Fund (IMF).

Resilience

Within this regulatory environment, Canada’s pension landscape has always demonstrated an impressive ability to adapt, endure, and evolve.

These characteristics are essential. They provide time and space when shocks come.

But they’re not the full story.

Resilience is also a mindset—the way institutions think about uncertainty, and the way they evolve through it.

In prudential terms, resilience complements risk management.

Risk management deals with what can be measured: known exposures, modelled scenarios, foreseeable shocks.

Resilience deals with what can’t be measured—the unmodelled, the unforeseen, the unknown, and most importantly, the ability to bounce back from those unforeseen events.

Together, they sustain confidence and prevent failure.

But of course, resilience requires resources—capital, time, and attention.

Those are always scarce.

So the question becomes: how do we get the most value for what we invest?

First, we need to design resilience in.

The most durable systems are built that way from the start.

When new processes or products are created, one question should always be asked:

How will this behave under stress? True strength isn’t revealed in calm markets—it’s tested when conditions shift unexpectedly. Plans can identify vulnerabilities before they become failures.

Secondly, we need to treat every crisis as a learning opportunity.

Even small disruptions reveal something useful.

Resilient organizations capture those insights and turn them into better systems.

And finally, we need to simplify for strength.

Complexity can conceal fragility.

Clear roles, simple governance, and direct communication often do more for resilience than another layer of control.

Resilience doesn’t mean doing more.

It means doing what matters—with intent, discipline, and awareness

BCFSA Sustainability Review

Of course, resiliency and risk management are vital to every institution across the system.

At BCFSA, we must also understand that resilience isn’t a static trait – it’s a practice.

This summer, BCFSA took steps to adapt to the risks and challenges of the existing environment. We took a close look at how we operate to make sure we’re using our resources wisely and sustainably, in service of the public and the sectors we regulate.

As part of this work, BCFSA simplified its organizational structure into three core departments and reduced its workforce, including the elimination of vacant roles.

The goal was to ensure BCFSA’s structure and spending align with its mandate and long-term priorities.

These organizational changes will help support BCFSA’s long-term sustainability as the province’s integrated financial services regulator.

Conclusion

Together, our challenge and our opportunity is to strengthen and maintain that bridge I spoke about. The strength of the bridge doesn’t come from just a single beam or cable. It comes from how every component works together to bear the weight of time and pressure.

And resilience isn’t about building a bridge so rigid that it never moves; it’s about building one that moves and returns to strength after stress.

As we look forward, let’s continue to invest in the long-term strength of our sector and maintain that bridge with trust and working together.

And finally, I would also love the opportunity to connect with you again at our own conference.

It’s the BCFSA Financial Services Sector Forum on November 13 at the Hyatt Regency Hotel.

If you haven’t registered already, I hope you’ll reach out. The information is on our homepage, and you can message registration@bcfsa.ca for information.

This full day will be about strategic dialogue, sector insights, and peer connection. I will be running a panel called Shocks, Shifts, and B.C.’s Evolving Economic Landscape. We have also invited Stephen Poloz, former Governor of the Bank of Canada, to speak to us about the Financial System Regulation in The Next Age of Uncertainty.

I hope you’ll join us.

Thank you.