On March 28, 2014, the Canadian Association of Pension
Supervisory Authorities (CAPSA) released the Defined Contribution (DC) Pension Plans
Guideline (CAPSA previously released a draft for comment in July 2012). While
CAPSA's guidelines do not have the force of law, these
guidelines may be used as a benchmark by the courts and/or
regulators to assess whether a DC plan administrator has fulfilled
its fiduciary obligations.
The Guideline includes:
a summary of guidance previously issued by CAPSA related to DC
clarification as to the respective rights and responsibilities
of plan administrators, employers, plan sponsors, service
providers, fund holders and members with respect to DC pension
examples of what would constitute an "adverse
amendment" for a DC pension plan (e.g., reductions in employer
contributions, increases in employee contributions, changes in who
pays for administrative expenses, and changes to the retirement
age). The significance of classification as an adverse amendment is
that, in certain jurisdictions, notice of an adverse amendment must
be provided to specified individuals before the amendment can be
Perhaps the most interesting aspect of the Guideline is that it
contains guidance regarding the tools and information that should
be provided to members both during the accumulation phase
and as they are approaching the payout phase (also known
as the "de-accumulation" phase). With respect to the
latter, the Guideline states that "[i]t is expected that the
plan administrator will provide information regarding all of the
retirement products available to members with respect to the payout
phase". This information should allow members to make
"informed decisions which strike a balance between protection
from the risks inherent in the various products and achieving
target replacement rates". To assist plan administrators,
CAPSA published an accompanying Reference Document which provides a
non-exhaustive list of regulated retirement products available in
The Guidelines clearly show that the pension regulators in
Canada see plan administrators as having a proactive role to play
in assisting DC plan members to transition to the de-accumulation
phase. For plan administrators (and their allied service
providers), there is no time like the present to review your
employee communications and to carefully consider whether these
obligations are being met in accordance with the standards set out
in the Guidelines.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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