Upcoming Changes in Group Retirement Plans: What You Need to Know

November 21, 2023

The landscape of group retirement in Canada is set for a significant shift with the imminent updates to the Capital Accumulation Plan (CAP) Guidelines. These guidelines form the foundation of how group retirement plans in Canada are organized, managed, and overseen. With these changes on the horizon, it’s a crucial time for advisors and plan sponsors to gear up for the future dynamics of retirement planning.

Major Focus Areas of the Upcoming Reforms

• Enhanced Emphasis on Sufficient Retirement Income: The expected regulatory changes are likely to prioritize ensuring retirees have adequate income.
• Boosting Member Engagement: There will be a push for increased member involvement to enable more informed decision-making.
• Streamlining Investment Choices: A move towards simplifying available investment options is anticipated.
• Reaffirming Plan Sponsors’ Duty of Care: A stronger focus on the responsibilities that plan sponsors have towards their members.
• Value for Money in Plans: Ensuring that retirement plans offer good value for the plan members.
• Support for Decumulation: Increased attention to the post-retirement phase of planning.

These themes align broadly with the recommendations from FSRA – OSFI, providing a snapshot of the regulatory trajectory.

Proactive Steps for Stakeholders

• Stay Updated: Keep up with regulatory developments, particularly during plan renewals and reviews, to ensure compliance and alignment with industry standards.
• Refine Governance Frameworks: Incorporate the above themes into governance reviews to assess how well your plan addresses retirement income, member engagement, fee structures, and decumulation strategies.
• Re-evaluate Benchmarking: In light of these regulatory shifts, revisit your benchmarking approach to ensure it reflects the evolving market and regulatory landscape.

Support from Common Wealth Common Wealth is equipped with the necessary tools, frameworks, and expertise to navigate these regulatory changes in the group retirement market. Our resources are designed to assist both advisors and employers in understanding and adapting to these reforms. For any questions or guidance, our team is ready to assist.

These regulatory shifts present an opportunity to work towards a more secure and prosperous retirement for all Canadian workers. Let’s embrace these changes together.

A Look at the CAP Guidelines Timeline For those interested in a deeper dive, here’s a brief timeline of the CAP Guidelines’ evolution:

• 2004: Introduction of the original CAP Guidelines, a collaborative effort among pension, securities, and insurance regulators nationwide.
• November 2021: OSFI and FSRAO propose revisions to CAPSA for updating the CAP Guidelines. Common Wealth summarizes these changes in an e-book and hosts a webinar with FSRAO representatives.
• May 2022: CAPSA proposes revisions to CAP Guideline No. 3, drafted by the CAP Committee with input from various regulatory bodies.
• May-August 2022: Industry feedback is sought on the first draft of these revisions.
• May 2023: A second revised draft is released by CAPSA, incorporating stakeholder feedback, open for consultation until July 2023.
• August 2023: Concerns about the proposed guidelines are raised by three industry groups, leading to calls for further review by a CAPSA-industry working group.

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