For the first time in 20 years, Canadian pension regulators have issued comprehensive new guidance on the design, operation and administration of capital accumulation plans (CAPs) such as defined-contribution pensions, RRSPs, TFSAs, RESPs and FHSAs.
The Canadian Association of Pension Supervisory Authorities (CAPSA) released two sets of guidance: an overarching guideline that replaces the version previously issued back in 2004, and a new guideline on risk management for plan administrators that consolidates its guidance on various risk areas, including the use of leverage, cybersecurity, investment governance and ESG issues.
“Significant developments have occurred in the financial services industries over the past 20 years and the new guideline reflects important updates of regulators’ views on the responsibilities of CAP sponsors, administrators and service providers in the current marketplace. It also clarifies expectations surrounding information to be communicated to members,” said Angela Mazerolle, chair of CAPSA, in a release.
CAPSA said the new guidance was crafted with input from representatives of both the Canadian Securities Administrators and Canadian Council of Insurance Regulators, given that many plans are operated by insurance and securities industry firms.
CAPSA’s new risk management guideline consolidates its approach to topics previously addressed in their own guidelines, and sets out principles to identify, evaluate, manage and monitor plans’ material risks.
“When administering the plan and investing pension plan assets, plan administrators must act in accordance with their fiduciary duty in fulfilling this purpose,” the guideline noted. “An effective framework for managing risk will assist plan administrators in keeping plan assets safe, protecting the plan from adverse risks, and supporting the plan in meeting its objectives.”
Mazerolle said the plan administrators should implement the new guidance “as soon as possible.” In areas where systems changes or new processes are required, the reforms should be adopted by Jan. 1, 2026.
“Both guidelines recognize the wide range in size and sophistication of plans, administrators, and sponsors,” said David Bartucci, chair of CAPSA’s risk management committee, in a release. “Proportionality is woven throughout these guidelines. CAPSA recommends that each sponsor and administrator review the guidelines and explore how they will implement the recommended practices in a manner that works for their membership and organization.”