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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.
The CAP Guideline, issued by the Canadian Association of Pension Supervisory Authorities, outlines common standards for CAPs across Canada, regardless of plan type or federal and provincial jurisdiction. While the CAP Guideline isn’t legislation, it reflects the standards that regulators expect sponsors and service providers to meet when operating a plan. Here is an overview of what the CAP Guideline covers.
The CAP Guideline was modernized in 2024 to reflect changes in legislation, the growth of the industry, and the evolution of best practices over the years. The changes expand and clarify the guideline to help sponsors define the purpose of their CAP, make decisions based on intended outcomes, and establish a robust governance framework.
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.
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.
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.
The guideline elaborates on oversight activities, expanding it to include reviewing fees and expenses, member education, and the governance framework.
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.
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.
This resource gives you an overview of the most notable changes to the CAP Guideline and offers our perspective on the likely impacts.
Changes are coming to the guideline for capital accumulation plans. See how a good governance framework could help sponsors get ready.
The commentary in this publication is for general information only and should not be considered
legal, financial, or tax advice to any party. Individuals should seek the advice of professionals to
ensure that any action taken with respect to this information is appropriate to their specific
situation.
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