The Association of Canadian Pension Management, the Canadian Life and Health Insurance Association and the Pension Investment Association of Canada say the Canadian Association of Pension Supervisory Authorities’ draft guideline for capital accumulation plans significantly alters the expectations and industry standards for CAPs.
In an open letter, the organizations requested the CAPSA reconvene its industry working group to review the current draft guideline in detail to address concerns about its reach, balance and potential for unintended consequences.
“We believe in its current form, the guideline can create adverse outcomes for Canadians,” said the letter. “In particular, increased burden may lead to less plan sponsors offering CAPs today, ultimately harming the ability of Canadians to save for retirement.”
While the revised version of the draft guideline provides some clarity and updates on best practices, the organizations said they have serious concerns over issues that haven’t been addressed from the last set of stakeholder comments.
They recommended a principles-based approach to regulation and industry guidance respecting CAPs, noting the prescriptive approach adopted in the current draft would discourage the adoption of new CAPs and the continued maintenance of existing CAPs.
“Applying regulator expectations for pension plan administrators, who are deemed fiduciaries under pension legislation, to sponsors of other types of CAPs amounts to regulatory overreach. It will increase compliance costs and administrative burden, which will deter current and future plan sponsors from offering CAPs to their employees and/or increase administration expenses. Fewer plans and higher costs for those plans ultimately harms CAP members and all Canadians in the long run.”
The organizations also requested the CAPSA consider further revisions to the draft guideline that would help smaller plans implement these changes and comply with new guidance in a cost-effective manner.