The Pension Investment Association of Canada is praising the Canadian Association of Pension Supervisory Authorities for addressing the regulatory inconsistencies facing Canada’s defined contribution pension plan sponsors in its draft strategic plan for 2023-2026.

“We commend CAPSA for its achievements in engaging with stakeholders to consider evolving regulatory risks and [capital accumulation plan] guideline development,” wrote Peter Waite, executive director of the PIAC, in an open letter. “PIAC continues to advocate and support collaboration in the pension industry, whether longstanding or in development.”

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The document, which the CAPSA published last week, outlines the association’s plans for harmonizing regulatory expectations and policies for CAP sponsors. In particular, the CAPSA said it intends to encourage jurisdictional authorities to develop coordinated approaches to regulatory issues in its guidelines.

In the letter, Waite said this will help regulators as they amend provincial pension legislation to enable variable payment lifetime annuities. “PIAC encourages CAPSA to release their framework on VPLAs as a high-priority item as provincial authorities are contemplating making amendments to their respective pension legislation to create standards that would enable the product.”

The draft also outlined plans to include guidelines on environmental, social and governance considerations in the CAPSA’s forthcoming consolidated risk management guidelines, which are set to be published this year. “PIAC believes the guidelines will enable plan administrators to consider material ESG factors and take appropriate action rather than continuing to debate the suitability of considering ESG.”

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However, the PIAC took issue with the lack of consistency in the CAPSA’s use of ESG-related terms. Throughout the draft, the CAPSA used “ESG factors,” “ESG characteristics” and “ESG information” in an interchangeable manner. “It would be prudent to either simply use ESG factors to create consistency or to define the differences if deemed necessary.”

The PIAC wasn’t the only organization to criticize the CAPSA’s terminological ambivalence. In its open letter response to the draft, the Canadian Federation of Pensioners suggested the CAPSA create a taxonomy of pension terms in order to clarify conversations held between industry stakeholders.

“The lack of this taxonomy results in much confusion and misunderstanding outside the pension industry,” wrote Mike Powell, president of the CFP, in the open letter. “It will be difficult to effectively engage stakeholders if they do not understand the terms. This is particularly important for politicians who ultimately vote for or against pension legislation.”

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