Current guidelines for capital accumulation plansLinkedIn
There, in black and white
Bulletin NB Vol. 7 N. 11, June 2004
On May 28, the Joint Forum of Financial Market Regulators, which was created in 1999 to develop governance rules for capital accumulation plan sponsors and service providers, issued the final version of its guidelines.
Capital accumulation plans (CAP) include defined contribution registered pension plans (DC plans), group registered retirement savings plans (RRSP) and deferred profit sharing plans (DPSP). Non-registered savings plans (plans outside an RRSP) and DC plans without investment options are not covered by these guidelines.
Although application is voluntary, the guidelines are an excellent practical guide for CAPs. In the event of legal disputes, sponsors that apply these new guidelines will have a better defense.
The increase in the number of CAPs in recent years, and the transfer to members of the responsibility for selecting investments, are two of the factors that created a need for more careful monitoring of obligations and regulations.
The main intent of the guidelines is to outline and clarify the rights and responsibilities of CAP sponsors (employers, unions and associations), service providers and CAP members. They also ensure that members are provided appropriate information and tools to make investment decisions.
Summary of the guidelines
Where the CAP sponsor does not have the necessary knowledge and skills to carry out its responsibilities, service providers should be used. The sponsor’s responsibilities include:
Implications for your capital accumulation plan
The Joint Forum expects these guidelines to be applied in their entirety by December 31, 2005, by which time all the preparatory steps will have to have been taken.
Please feel free to contact us for additional information.
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