As mentioned in our February 5th blog post, the Canadian Association of Pension Supervisory Authorities (“CAPSA”) recently published a status update on a number of guidelines. In the update, CAPSA indicated that Guideline No. 8 – Defined Contribution Pension Plans Guideline and Guideline No. 9 – Searching for Un-locatable Members of a Pension Plan would be published in early 2019. On February 7th, the final version of both CAPSA Guidelines was published.
CAPSA Guideline No. 8: Defined Contribution Pension Plans Guideline (“DC Plans Guideline”)
CAPSA first published the DC Plans Guideline in 2014. The revised DC Plans Guideline reflects the work of the Defined Contribution Pension Plans Committee, which focused on three major areas: communication to members regarding variable benefits, assumptions used in retirement projections and disclosure of fees.
The DC Plans Guideline highlights the rights and responsibilities of plan administrators, employers, plan sponsors, service providers, fund holders and members under a defined contribution registered pension plan (“DC plan”). With respect to the responsibilities of plan administrators, CAPSA notes that the administrator of a DC plan is responsible for a number of tasks, including: introducing the plan to members, providing investment information and, if the members have the ability to select among designated investment options, providing decision-making tools to members.
In the revised DC Plans Guideline, CAPSA has updated its recommendation with respect to retirement projections. It now recommends that plan administrators “provide members, at least annually, with an estimate of the value of the member’s account at retirement” and that administrators “consider providing members, at least annually, with an estimate of the benefit that may result from that value.” The revised DC Plans Guideline also includes updated commentary on variable benefits and disclosure of fees.
CAPSA Guideline No. 9: Searching for Un-locatable Members of a Pension Plan (“Guideline No. 9”)
Guideline No. 9 sets out a number of best practices for pension plan administrators in dealing with missing or un-locatable members (members who have terminated plan membership but still have an entitlement to benefits under a pension plan). These include:
- Records retention and management: To minimize the loss of member and beneficiary information, CAPSA recommends that plan administrators develop and implement a comprehensive records retention policy. According to CAPSA, the policy should include a component that sets out how the plan administrator will maintain contact with former and retired members. CAPSA suggests that coordinating and sharing information among service providers, custodians, bargaining agents and plan sponsors could be a way of ensuring that member contact information is current.
- Searching for un-locatable members: CAPSA reminds plan administrators that it is their responsibility to conduct a search for un-locatable or missing members but acknowledges that in most jurisdictions in Canada, there is no legislative framework or standardized process in place for doing so. Common search tools, as noted by CAPSA, include: searches of government databases, professional search organizations and the mailing of registered letters to the last known address of the member.
- Steps to consider after unsuccessful search: CAPSA identifies a number of potential options available to plan administrators after an unsuccessful search, including the Canada Revenue Agency letter forwarding service. CAPSA also suggests that “where feasible, pension plan administrators could establish a database/registry of missing members on the sponsoring employer or the administrator’s website.”
CAPSA Guidelines do not have the force of law but are generally considered best practices for administrators of registered pension plans. Pension plan administrators should ensure that they review the final versions of both Guidelines and understand the best practice recommendations.