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.

What the CAP Guidelines do

The CAP Guidelines, issued by the Canadian Association of Pension Supervisory Authorities (CAPSA), outline common standards for CAPs across Canada, regardless of plan type or federal and provincial jurisdiction. While the CAP Guidelines aren’t legislation and are voluntary, they reflect the standards that regulators expect sponsors and service providers to meet when operating a plan. Here is an overview of what the CAP Guidelines cover.

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

Changes are coming to the CAP Guidelines

The current guidelines were issued in 2004. Since then, many factors have changed the retirement landscape, including the growth of the industry, increases in investment options, and the emergence of digital technologies. In 2022, CAPSA began work on updating the CAP Guidelines to address these changes. The proposed revisions clarify roles and responsibilities, expand on existing guidelines, and introduce new elements. While the process is still ongoing, the most notable changes are expected to focus on certain key areas below.

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. 

Download the white paper

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