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Normandin Beaudry

Current guidelines for capital accumulation plans


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:

  • Setting up the plan, which means selecting the investment options that will be made available to members and be consistent with the purpose of the plan, and ensuring that proper records are kept;
  • Providing investment information and decision-making tools to CAP members;
  • Introducing the plan to members and providing information about the available investment options and transfer options, including associated fees and penalties;
  • Providing all relevant information to members (personalized account statements and reports on the rate of return of the investment funds);
  • Providing advance notice to members of any proposed changes and their future impact;
  • Monitoring the plan’s performance by reviewing service providers, records maintenance and investment decision-making tools.

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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