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 employers that provide a
defined contribution pension plan or a pension plan with a defined
contribution component. 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
Employers will likely be aware of existing CAPSA guidance
related to DC plans, such as Guideline No. 3: Guidelines for
Capital Accumulation Plans (CAP Guidelines) and Guideline No. 4:
Pension Plan Governance Guidelines and Self-Assessment
Questionnaire. Another applicable CAPSA guideline that employers
also will likely be aware of, and which we wrote about
in November 2011, is Guideline No. 6: Pension Plan Prudent
Investment Practices Guideline.
The new Guideline summarizes the existing guidance, and outlines
and clarifies the rights and responsibilities of applicable DC plan
stakeholders, such as employers, plan sponsors (often the
employer), and plan administrators. More notably, the Guideline is
also intended to:
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.
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 Guidelines highlights that some jurisdictions may require
plan administrators to provide appropriate notice of adverse
The release of this Guideline provides a sound rationale for
employers who provide DC plans to assess their pension plan
policies and procedures. In particular, employers who are also DC
plan administrators should consider whether any practices should be
adjusted to align with the additional guidance set out in the
Guideline. For example, some of the Guideline's
information-related guidance is new or has not been set out
explicitly in previous CAPSA guidelines so plan administrators may
wish to consider such guidance.
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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