Provincial and federal pension benefits legislation across Canada often does not provide specific guidance to employers as to how they should deal with many basic questions in running a pension plan.
The Canadian Association of Pension Supervisory Authorities (CAPSA) stepped in to assist. For more than two decades, CAPSA has been issuing guidance documents on many issues, such as electronic communication to plan members, fundholder arrangements, defined benefit plan funding policies, and un-locatable plan members. The 2004 CAPSA “Guidelines for Capital Accumulation Plans” (CAP Guidelines) are viewed by many stakeholders in the pension industry as the “gold standard” of practical suggestions as to how to administer defined contribution pension plans.
Pronouncements from CAPSA are significant because CAPSA members are the pension regulators across Canada, including the Financial Services Regulatory Authority of Ontario, and Retraite Québec. CAPSA states on its website, “Canadian pension regulators generally expect that registered pension plans will operate in accordance with CAPSA Guidelines.”
CAPSA has been busy. In the last few weeks, it has issued consultation drafts seeking comments on several proposed guidelines:
- CAPSA plans to update and replace the 2004 CAP Guidelines. The consultation draft can be found here: https://www.capsa-acor.org/Documents/View/1904. CAPSA is seeking feedback to be submitted no later than August 15, 2022. This is a must-read for administrators of capital accumulation plans, including defined contribution pension plans.
- CAPSA is seeking stakeholder feedback on a consultation draft of an entirely new “Cyber Risk for Pension Plans” guideline by September 15, 2022. It can be found here: https://www.capsa-acor.org/Documents/View/1923.
- The topic of ESG factors relevant to defined benefit and defined contribution pension plans is addressed in a new CAPSA Guideline that can be found here: https://www.capsa-acor.org/Documents/View/1914. Comments should be submitted by September 15, 2022.
- Finally, CAPSA issued a consultation draft regarding management of risks associated with the use of leverage in pension plan investments (https://www.capsa-acor.org/Documents/View/1921) Comments are due by September 15, 2022.
CAPSA guidelines are not legislation. Nevertheless, adherence to the guidelines will help employers defend against claims that they have not followed the often-vague requirements of Canadian pension legislation.
If you have any questions about CAPSA’s proposed guidelines, please reach out to any member of Dentons Canada’s Pensions, Benefits and Executive Compensation group.