Capital accumulation plan member outcomes saw a modest decline in the second quarter of 2022, as rising interest rates and the corresponding rise in annuity rates helped offset the falling investment markets, according to Eckler Ltd.’s latest CAP income tracker.
It found a typical male member retiring at the end of June 2022 achieved a gross income replacement ratio of 60.2 per cent and a female member achieved 58.8 per cent.
Highlighting the six recommendations put forward by the Financial Services Regulatory Authority of Ontario and the Office of the Superintendent of Financial Institutions’ defined contribution technical advisory committee, Eckler also noted the Canadian Association of Pension Supervisory Authorities has now released a draft update that focuses on several key areas, centred on improving member outcomes.
These areas include: a shift away from accumulation with additional director on decumulation and post-retirement savings vehicles; member education, such as encouraging active education and communication with CAP members, providing members with retirement income projections to better understand their income in retirement and making members aware of CAP features that may improve their potential outcomes, such as employer-matching contributions; and enhanced transparency, such as additional information on investment fees and reasonableness of those fees and ensuring that CAP members consider the impact of fees on their savings.
In a press release, Eckler said these draft guidelines are a critical step toward improving retirement outcomes for plan members.