Shift warns Canada's Chief Actuary is severely underestimating climate risks to public pension plans

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Written By Shift Action

Toronto, ON | Traditional territories of the Wendat, Anishnaabeg, Haudenosaunee, Chippewas and Mississaugas of the Credit First Nation

Pension watchdog and sustainable finance organization Shift: Action for Pension Wealth and Planet Health (Shift), represented by environmental law charity Ecojustice, has written to Canada's Office of the Chief Actuary (OCA) warning that the OCA is severely underestimating the systemic financial risks of climate change in its valuation assessments.

Shift and Ecojustice are concerned that the OCA is failing to assess the cascading economic and financial impacts of a rapidly warming world. This could have severe consequences for the Canada Pension Plan (CPP) and the Public Sector Pension Plan (PSPP), which collectively have more than $1 trillion in retirement savings under management on behalf of millions of Canadians.

"Many of Canada's largest pensions are sleepwalking into a climate crisis with existential consequences for their members,” says Adam Scott, Executive Director of Shift. “The Chief Actuary needs to do its job by ensuring its statutory actuarial valuations of federal plans and programs actually reflect the reality of these risks, so that they can be managed before it’s too late.”

Research from Ortec Finance, cited in the letter, warns that Canadian pension funds could see investment returns fall by up to 50% by 2040 if global warming reaches 3.7°C, with potential declines approaching 60% in severe climate scenarios. Such extreme futures are within the expected range of possible warming scenarios if governments, investors and companies fail to address the climate crisis by rapidly phasing out the production and use of fossil fuels and reducing greenhouse gas emissions. Ignoring or severely underestimating these climate-related financial risks could mean that younger workers may face dramatically reduced retirement benefits and/or the need for significantly higher contribution rates.

The letter was submitted today to Chief Actuary Assia Billig and copied to Finance Minister François-Philippe Champagne, Treasury Board President Shafqat Ali, and senior executives at CPP Investments and PSP Investments. In the letter, Shift and Ecojustice outlined critical gaps in how climate risks are being assessed and reported to the federal government and public pension fund managers by the OCA.

Key Concerns Raised:

  • Missing "Worst-Case" Climate Scenarios: The Chief Actuary's current analysis assumes only an 8% GDP decline by 2050 and 30% by 2100 in a "failed transition" scenario. However, leading climate scientists and actuaries project potential GDP losses of 65% to 73% by 2100 if global temperatures rise 4°C above pre-industrial levels.

  • Ignoring Climate "Tipping Points": The analysis does not identify or appear to account for irreversible climate impacts, such as ice sheet collapse and permafrost melt, that could trigger runaway warming and massive economic disruption. These tipping points become increasingly likely if global temperature increases exceed 1.5°C above pre-industrial levels.

  • Fossil Fuel Investment Risks: With CPP Investments holding over $22 billion in fossil fuel production assets as of October 2024 and PSP Investments holding an estimated $6.2 billion to $8.1 billion in fossil fuel assets as of March 31, 2024, the letter warns that these investments face mounting financial risks from asset stranding and potential liability claims.

  • Unrealistic "Baseline" Scenarios: Current OCA projections assume a world without climate impacts through 2100, which experts consider implausible given that Earth's temperature is already approaching 1.5°C above pre-industrial levels. Climate change has already created a measurable drag on economic growth and investment returns, including in Canada, yet even these existing impacts are not reflected in the OCA’s baseline pension projections.

Financial Stakes for Young Canadians

The warnings carry particularly significant implications for younger Canadians who have recently entered the workforce and are just beginning to contribute to pension plans. These workers face a double threat: they have decades of pension contributions ahead during a period of escalating climate instability, and they won't be eligible to receive their pension benefits until well after 2050, when climate impacts are expected to be most severe.

Climate change is already imposing measurable economic costs and dragging down global economic growth and investment returns through extreme weather events, supply chain disruptions, and reduced agricultural productivity. The OCA has an essential role in ensuring climate-related financial risks are being adequately understood and managed by federal public pension and insurance plans, and a range of Canadian social security programs, including the CPP and PSPP.

Recommendations for the Chief Actuary

Shift and Ecojustice make several recommendations for the OCA to address the climate-related risks that appear to be missing from its work, including:

  • Include realistic climate tipping points and cascading impacts in risk assessments;

  • Reassess economic models to avoid underestimating worst-case climate scenarios;

  • Provide clearer qualitative descriptions of climate uncertainties and risks;

  • Give greater consideration to risks from fossil fuel investments;

  • Integrate climate impacts into baseline financial projections.

“Pension plans are meant to provide a measure of future financial security,” says Tanya Jemec, Finance Lawyer for Ecojustice. “The Chief Actuary has a key role to play in helping the Canadian public, government, and pension decision-makers understand how this security could be at risk, particularly for young people and future generations, if we do not act now to avoid high global warming scenarios.”

The full letter, sent by Ecojustice on behalf of Shift to the OCA, can be found here: https://ecojustice.ca/wp-content/uploads/2025/08/2025-08-28-EJ-letter-on-behalf-of-Shift-to-Chief-Actuary.pdf.  

About the Chief Actuary

The Office of the Chief Actuary (OCA) is responsible for conducting statutory actuarial valuations for federal public sector employee pension and insurance plans, and a range of Canadian social security programs, including the Canada Pension Plan (CPP), the Old Age Security (OAS) Program, the Canada Student Financial Assistance Program, and the Employment Insurance Program. The OCA's actuarial reports are used by government decision-makers and inform policy direction on matters affecting millions of Canadians.

About the Organizations

Shift: Action for Pension Wealth and Planet Health is a charitable initiative that works to protect pensions and the climate. Shift is a project of MakeWay Canada.

Ecojustice is Canada's largest environmental law charity, serving as legal counsel to Shift on this matter.

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