February 27, 2024
How important is governance to the success of a CAP?
Changes are coming to the guidelines for capital accumulation plans. See how a good governance framework could help sponsors get ready.
Navigating the CAP Guidelines
If you have a role in setting up and managing a retirement savings plan in Canada, the guidelines for capital accumulation plans (CAP Guidelines) provide a framework of best practices that are key to a successful CAP. Understanding these guidelines, how they’re evolving, and how to incorporate them can help you build a successful plan and maximize its value to members.
Set up and maintenance of a CAP
- Roles and responsibilities
- Selecting service providers
- Periodically reviewing all aspects of the plan
- Terminating a CAP or member
Investment selection and monitoring
- Selecting a suitable investment lineup for the plan
- Monitoring of investment options and funds
- Ensuring competitive fees
Member onboarding and education
- Supporting member enrolment
- Helping drive successful outcomes with decision-making tools and financial planning resources
- Selecting a third party to provide advice to members
Fee management and disclosures
- Ensuring competitive fees
- Disclosing those fees to the members
Clarifying roles and responsibilities
Elaboration on roles, rights, and responsibilities of key CAP players, including the standard of care owed by the sponsor to the members.
Enhancing member education and engagement
The sponsor should adopt a strategy designed to improve decision-making and outcomes. This includes providing members with projections and introducing new elements to member statements.
Anticipating future innovations
The sponsor should consider whether to set up automatic features, such as auto-enrolment or auto-escalation of member contributions. The proposed guidelines establish a framework for offering these features.
Expanding on disclosures
A new section in the proposed guidelines focuses on expanded disclosures of fees and expenses and how they should be communicated to members.
Investment selection, monitoring, and advice
Additions include factors that the sponsor should consider when selecting investment options and selecting a third party to offer advice to members.
Establishing governance
The sponsor would be required to set up a governance framework appropriate for the size and complexity of both the CAP and the CAP sponsor. The proposed guidelines detail what that framework should include.
Get ready with these resources
While the revised CAP Guidelines are still being finalized, now is the opportunity to get ready by staying on top of developments. The resources below can help you understand the proposed changes and their implications.
White paper
Our white paper gives an overview of the CAP Guidelines, summarizes the most notable changes proposed in the latest draft from CAPSA, and offers perspective from the industry on the potential impact of these changes. We also discuss the importance of a robust CAP governance framework to the success of a CAP.
Current guidelines
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