The Canadian Association of Pension Supervisory Authorities’ draft guideline for pension plan risk management covers too many topics and audiences, limiting its practical applicability, according to the Association of Canadian Pension Management.
In an open letter, the ACPM said the draft guideline lacks a structural framework that would allow pension plan administrators to implement a process to identify, evaluate, manage and monitor material risks. It also noted the guideline appears to be the culmination of information from a variety of different sources.
“It would benefit from a careful review and refinement for consistency and brevity. A shorter document would better focus plan administrators’ attention on the steps to be taken to establish an effective risk management program.”
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The letter also urged the CAPSA to consider the guideline’s target audience, noting while the guideline acknowledges proportionality, there’s little consideration or express guidance for smaller plans. “This lack of general guidance leaves the administrators of smaller plans to determine whether and how to incorporate the principles into their governance, whether through their own resources or by incurring material consultant expenses.”
While the draft guideline is intended for all pension plan administrators, the ACPM said most of the content addresses issues applicable to defined benefit and target-benefit pension plans, adding it requires more direction on how a plan administrator can adapt its risk management practices to better reflect its own situation, particularly for smaller pension plans and defined contribution plans.
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