On March 28, 2014, the Canadian Association of Pension
Supervisory Authorities released Guideline No. 8: Defined Contribution Pension
Plans Guideline. The Guideline supplements existing CAPSA
guidance related to DC plans and provides additional guidance to
plan administrators, plan sponsors, employers, service providers,
fund holders and members with respect to defined contribution
pension plans. Although the Guideline is not a legal requirement,
it reflects the expectations of regulators regarding the operation
of DC plans. For plan administrators, in particular, the Guideline
can assist in meeting their fiduciary duties.
THE NEW GUIDELINE
The purposes of the Guideline are four-fold:
Summarize existing CAPSA guidance related to DC plans, such as
Guideline No. 3: Guidelines for Capital Accumulation Plans (CAP
Guidelines), Guideline No. 4: Pension Plan Governance Guidelines
and Self-Assessment Questionnaire, and Guideline No. 6: Pension
Plan Prudent Investment Practices Guideline, which
we wrote about in November 2011.
Outline and clarify rights and responsibilities of plan
administrators, plan sponsors, employers, service providers, fund
holders and members with respect to DC plans.
Provide DC plan administrators with guidance regarding tools
and information to provide to members while they are choosing among
Clarify what constitutes an "adverse amendment" with
respect to DC plans.
The more notable aspects of the Guideline are the guidance that
it provides to plan administrators with respect to information for
members and "adverse amendments".
INFORMATION FOR MEMBERS
The Guideline provides plan administrators additional guidance
(which goes beyond the guidance provided in the CAP Guidelines) on
providing information to (i) members during the accumulation phase
and (ii) members who are approaching the payout phase.
During the accumulation phase, the Guideline encourages plan
administrators to consider providing information regarding
investment choices, information regarding contributions, and
information regarding projected account balance at retirement. Of
note, the Guideline provides that plan administrators should
consider providing members with information and tools to help them
understand and estimate their plan benefits on retirement.
During the period where members are approaching the payout
phase, the Guideline outlines a number of considerations, including
that it is expected that plan administrators will provide
information regarding all of the regulated retirement products
available to members. The Guideline refers to a separate document
that was released by CAPSA on the same day as the Guideline: CAPSA Reference Document: Registered
Retirement Products for DC Plan Members. The Reference
Document provides further details on the information and general
features regarding retirement products that plan administrators may
provide to members.
The Guideline also comments on ongoing communication during the
payout phase, clarifying that plan administrators are responsible
for ongoing communication during that phase only where the payout
product is a variable benefit.
The Guideline provides that adverse amendments are amendments
which adversely affect the prospective benefits, rights or
obligations of members or other persons (e.g. beneficiaries)
entitled to payments from the fund. Some examples of changes which
may be considered to be adverse amendments are reduction of
employer contributions, increase in employee contributions, changes
in expense allocation and changes to possible member retirement
The Guideline highlights that some jurisdictions may require
plan administrators to provide appropriate notice of adverse
All that are involved in operating DC plans, and plan
administrators in particular, should consider the Guideline and
assess whether any changes should be made. For example, plan
administrators may wish to consider the Guideline's
information-related guidance, some of which is new or has not been
set out explicitly in previous CAPSA guidelines.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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