Voluntary guidelines for employer-sponsored retirement plans are changing for the first time since 2004. There’s been tremendous change in the past 20 years, including technology, the makeup of the workforce and types of plan investment options.

These changes have had major effects on employer-sponsored retirement savings programs, such as group Registered Retirement Savings Plans (RRSPs) and defined contribution plans. With that in mind, regulators1 have proposed recommendations to update the CAP guidelines for plan sponsors and administrators.

Recommended Capital Accumulation Plans guideline changes

Recommendations for updating the guidelines comprise the following six items:

  1. Conduct outcome-focused decision-making.
  2. Support and seek to enhance member engagement.
  3. Provide specific guidance on investment line-ups and default fund selections.
  4. Adhere to common standards of plan governance and responsibility.
  5. Strive to provide value when making administrative and investment decisions.
  6. Consider the outcomes of DC pension plans along with ways to support plan members in the decumulation phase.2

The CAP guidelines have been updated to reflect these recommendations. Employers can consider them as best practices to support the financial well-being of their employees. The overall objective is to ensure that plan sponsors act in the best interests of plan members.

Unlike American retirement plans governed by the U.S. Department of Labor’s Employee Retirement Income Security Act of 1974 (ERISA), the CAP guidelines in Canada are recommended best practices rather than regulations. If followed, they will generally lead to better employee outcomes.

Turning the CAP guidelines into a better retirement plan

For employers, following the CAP guidelines is another way of supporting their employees’ financial wellbeing through their retirement benefits. Prospective and current employees will have greater engagement with the organization and organizations will have an easier time attracting and retaining top talent.

When valuing a capital accumulation plan as an employee benefit, employers should endeavor to improve its effectiveness. Much of what far-sighted employers are already doing is embedded within the new CAP guidelines.

To fully take advantage of the guidelines, plan sponsors should ask themselves the following questions:

  • Is the plan’s investment lineup straightforward while offering sufficiently diverse options?
  • Are default fund selections appropriate for a long-term investment horizon?
  • What can be done to measure and support member engagement?
  • Is the plan receiving value for the money spent on it?
  • Are members’ interests being well-served?

Support and guidance are key

Of particular importance is the increased emphasis on support and guidance on decumulation options and providing clear, effective communication to plan members to help them make informed decisions. For instance, plan members will need guidance to cope with sequencing risk and longevity risk.

Sometimes overlooked (particularly by smaller organizations) is formalizing plan procedures in a document that clarifies responsibilities and accountability. The risk of taking an informal, undocumented approach — which often relies heavily on a single person — is having nothing when unwritten institutional knowledge leaves the organization.

HUB International’s employee benefit and retirement specialists consult with employers of all sizes and in all industries on every aspect of employee benefits planning and management.

1 Canada’s Office of the Superintendent of Financial Institutions (OSFI) and the Financial Services Regulatory Authority of Ontario (FSRA) made the recommendations to the Canadian Association of Pension Supervisory Authorities (CAPSA).
2 Financial Services Regulatory Authority of Ontario, “Working towards harmonization: Recommendations for strengthening the CAP guidelines from the joint OSFI and FSRA technical advisory committee for the review of DC pension plans,” accessed August 7, 2024.