February 27, 2024
Navigating the CAP Guideline
If you have a role in setting up and managing a retirement savings plan in Canada, the guideline for capital accumulation plans (CAP Guideline) provides a framework of best practices that can be key to a successful CAP. Understanding the guideline and how to incorporate it can help you build a successful plan and maximize its value to members.
Setup, maintenance, and oversight of a CAP
- Roles and responsibilities
- Defining the purpose and features of a CAP
- 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, education, and ongoing communication
- Supporting member enrolment and investment selection
- Helping drive successful outcomes with educational resources and decision-making tools
- Providing access to account and plan information
- Selecting a third party to provide financial planning advice to members
Fee management and disclosures
- Ensuring competitive fees
- Disclosing those fees to the members
Clarifying roles, responsibilities, and definitions
The guideline elaborates on roles, rights, and responsibilities of key CAP players, and expands the list of plan tax types covered by the guideline, to reflect the market.
Enhancing member education, engagement, and outcomes
The sponsor should adopt a strategy designed to improve decision-making and outcomes. This includes developing an education strategy, providing members with projections, and giving them access to tools and advice.
Using automatic features
The sponsor may consider whether to set up automatic features to improve outcomes, such as auto-enrolment or auto-escalation of member contributions. The guideline establishes a framework for offering these features.
Expanding on oversight
The guideline elaborates on oversight activities, expanding it to include reviewing fees and expenses, member education, and the governance framework.
Investment selection, monitoring, and advice
Additions include factors that the sponsor should consider when selecting investment options and selecting a third party to offer investment and financial planning advice to members.
Establishing governance
The sponsor should set up a governance framework appropriate for the nature (size, complexity, and other characteristics) of both the CAP and the sponsor. The guideline details what such a framework would include.
Webinar: Understanding the modernized CAP guideline
Choose a session on the date and language of your choice and click the link to register.
English
Thursday, October 17, 1:00 P.M., ET
Tuesday, October 22, 1:00 P.M., ET
Tuesday, October 29, 1:00 P.M., ET
French
Tuesday, October 22, 3:00 P.M., ET
Tuesday, October 29, 3:00 P.M., ET
This webinar will qualify for continuing education credits.
Our speaker:
Marc-Antoine Morin
Head of Member Engagement, Canada, and Member of the Retirement Committee of the Canadian Life and Health Insurance Association
Position paper
Our position paper gives an overview of the most notable changes to the CAP Guideline and offers our perspective on the likely impacts.
Viewpoints
Useful links
Important disclosures
Investing involves risks, including the potential loss of principal. Financial markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. The information provided does not take into account the suitability, investment objectives, financial situation, or particular needs of any specific person.
All overviews and commentary are intended to be general in nature and for current interest. While helpful, these overviews are no substitute for professional tax, investment or legal advice. Clients and prospects should seek professional advice for their particular situation. Neither Manulife Investment Management, nor any of its affiliates or representatives (collectively “Manulife Investment Management”) is providing tax, investment or legal advice.
This material is intended for the exclusive use of recipients in jurisdictions who are allowed to receive the material under their applicable law. The opinions expressed are those of the author(s) and are subject to change without notice. Our investment teams may hold different views and make different investment decisions. These opinions may not necessarily reflect the views of Manulife Investment Management. The information and/or analysis contained in this material has been compiled or arrived at from sources believed to be reliable, but Manulife Investment Management does not make any representation as to their accuracy, correctness, usefulness, or completeness and does not accept liability for any loss arising from the use of the information and/or analysis contained. The information in this material may contain projections or other forward-looking statements regarding future events, targets, management discipline, or other expectations, and is only current as of the date indicated. The information in this document, including statements concerning financial market trends, are based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. Manulife Investment Management disclaims any responsibility to update such information.
Manulife Investment Management shall not assume any liability or responsibility for any direct or indirect loss or damage or any other consequence of any person acting or not acting in reliance on the information contained here. This material was prepared solely for informational purposes, does not constitute a recommendation, professional advice, an offer or an invitation by or on behalf of Manulife Investment Management to any person to buy or sell any security or adopt any investment approach, and is no indication of trading intent in any fund or account managed by Manulife Investment Management. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Diversification or asset allocation doesn’t guarantee a profit or protect against the risk of loss in any market. Unless otherwise specified, all data is sourced from Manulife Investment Management. Past performance does not guarantee future results.
A widespread health crisis such as a global pandemic could cause substantial market volatility, exchange-trading suspensions and closures, and affect portfolio performance. For example, the novel coronavirus disease (COVID-19) has resulted in significant disruptions to global business activity. The impact of a health crisis and other epidemics and pandemics that may arise in the future, could affect the global economy in ways that cannot necessarily be foreseen at the present time. A health crisis may exacerbate other pre-existing political, social and economic risks. Any such impact could adversely affect the portfolio’s performance, resulting in losses to your investment.
This material has not been reviewed by, and is not registered with, any securities or other regulatory authority, and may, where appropriate, be distributed by Manulife Investment Management and its subsidiaries and affiliates, which includes the John Hancock Investment Management brand.
Manulife, Manulife Investment Management, Stylized M Design, and Manulife Investment Management & Stylized M Design are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates under license.
Past performance does not guarantee future results.