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Following the Capital Accumulation Plan Guidelines: Corporate Liability for Group RSP's

Updated: Jan 27, 2021

Does your organization offer employees Group Retirement Savings Plans (Group RSP) or Defined Contribution Pension Plans? While it’s a terrific employee benefit that helps attract and retain talent, while supporting them in planning for their future, it’s important to be aware of the corporate liability that comes along with offering such plans.l What many corporate sponsors and plan facilitators don’t realize is that as an organization that provides a Group RRSP or a Defined Contribution Pension Plan, you have a fiduciary duty to comply with the Capital Accumulation plan guidelines.

In this article, we will talk you through what the Capital Accumulation Plan guidelines are, how they impact Group Retirement Savings Plans and Defined Contribution Pension Plans, as well as your key responsibilities as a Capital Accumulation Plan sponsor.

What is a Capital Accumulation Plan (CAP)?

A Capital Accumulation Plan is a tax-assisted investment or savings plan that permits participating members to take control of their investing and make their own investment decisions between two or more options offered within the plan. Examples of a Capital Accumulation Plan include Defined Contribution Pension Plans, Group Retirement Savings Plans, or Tax-Free Savings Accounts (TFSAs).

An employer, trade union or association can establish a Capital Accumulation Plan for its employees or members as a benefit for joining the organization. When they establish a Capital Accumulation Plan, they are considered the ‘sponsor’ and are legally responsible for following the Capital Accumulation Plan (CAP) guidelines.

What are the Capital Accumulation Plan (CAP) guidelines?

As an employer that is managing Group Retirement Plans or Defined Contribution Pension Plans, the most important aspect is the Capital Accumulation Plan (CAP) guidelines.

Prior to the Capital Accumulation Plan (CAP) guidelines, there was little or no responsibility placed on plan managers, often employers, to help plan members to understand their options so they could develop effective strategies to save for their future. The Capital Accumulation Plan (CAP) guidelines were developed by the Joint Forum of Financial Market Regulators to fill that gap.

The guidelines are intended to outline the rights and responsibilities of Capital Accumulation Plan sponsors, services providers and members, as well as ensure that members are provided with all the information needed to make informed investment decisions as within the Capital Accumulation Plan they contribute to. They are also designed to ensure consistent regulatory results for all Capital Accumulation Plan products and services, no matter the regulatory system that applies to them.

As an organization that offers Group Retirement Plans or Defined Contribution Pension Plans, it’s important to familiarize yourself with and adhere to the CAP Guidelines to mitigate risks or legal implications.


Not sure if your organization is compliant with the Capital Accumulation Plan (CAP) Guidelines?

Watch our on-demand webinar to learn about corporate liability and responsibility for organizations that offer group retirement savings plans or defined contribution pension plans.


What are the Capital Accumulation Plan (CAP) guidelines' responsibilities?

The Capital Accumulation Plan guidelines outline how sponsors should approach their plan and support members throughout every stage, including setting up a CAP, providing investment information and decision-making tools, and maintaining a CAP over time. If your organization or association is managing a Capital Accumulation Plan, we highly recommend familiarizing yourself with the full Capital Accumulation Plan Guidelines.

For now, here is a brief outline of some of the key responsibilities of a CAP sponsor as specified in the Capital Accumulation Plan guidelines:

  • Investment Options - the Capital Accumulation Plan sponsor should ensure a range of investment options are available to plan members

  • Investment Information - the Capital Accumulation Plan sponsor should provide detailed investment information and decision-making tools to members to best assist them in making strategic investment decisions within the plan.

  • Ongoing Communication to Members - Capital Accumulation Plan sponsors should provide regular, ongoing communications to members with information on their account performance and investment funds that are available within their plan.

  • Reviewing Service Providers and Investment Options - Capital Accumulation Plan sponsors should periodically review all service providers and investment options that are available to plan members.

  • Additional Information - Capital Accumulation Plan sponsors should provide all members with an outline that provides a clear approach as to how they can access additional information related to their plan.

As well as the requirements for Capital Accumulation Plan sponsors, there are also guidelines for Capital Accumulation Plan members. Each member has a responsibility to use the information and tools provided by the plan sponsor to make the best possible investment decisions for them. It’s down to each individual member to take the time needed to get the most from the tools and resources provided by the plan sponsor.

How can you ensure Group RSP or Defined Contribution Pension Plan Capital Accumulation Plan (CAP) compliance?

Are you confident that your organization is compliant with the Capital Accumulation Plan (CAP) guidelines? Are you sure you are doing all you should be to adhere to the guidelines to mitigate risks to your organization? If you’re not 100% confident that you can answer ‘Yes!’ to these questions, then not to fear – we have the answers!

Watch our insightful and actionable on-demand webinar to learn more about corporate liability and responsibility for organizations that offer group retirement savings plans and defined contribution pension plans.

In this webinar, we are joined by Nick Simpson, Senior Counsel for The Canada Life Assurance Company, who shares real-world examples of legal issues that have arisen when plan sponsors/facilitators don’t adhere to the guidelines.

Watch the webinar today and learn how to protect your organization! If you have any questions in the meantime, we’d be happy to help. Don’t hesitate to get in touch today.

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