CAP Guidelines are getting an overhaul. Here’s your TLDR
Within the next year, big changes are coming to the rules that govern workplace retirement plans in Canada – changes that will leave legacy plan providers behind the times, and their clients looking for a better provider.
At Common Wealth, we’re passionate about all things retirement. That means we don’t just read the regulatory fine print – we get out the popcorn and host a listening party for it.
To help you steer your clients ahead of these changes, we’ve done the deep dive on what these changing regulations will mean for the retirement benefits industry – and for your business.
What are these regulatory changes about?
The Capital Accumulation Plan (CAP) Guidelines, Canada’s primary document governing workplace retirement plans, including group RRSPs, are under review. Two of Canada’s leading financial services regulators are leading the charge: the Office of the Superintendent of Financial Institutions (OSFI) and the Financial Services Regulatory Authority of Ontario (FSRAO). In 2021, OSFI and FSRA formed a committee with a broad cross-section of industry voices to develop recommendations with the goal of improving outcomes for plan members.
The recommendations include:
- Making it clear that the goal of the plan is to generate lifetime retirement income for plan members
- An increased focus on plan member engagement
- More specific guidance on investment line-up design
- Aligning plan sponsor responsibilities across different plan types
- A greater emphasis on value for money
- Providing more guidance to plan members in the decumulation phase
What will these changes mean for the retirement benefits industry?
These recommended changes will have widespread implications for most existing plan providers, from improving plan members’ digital experience, to demonstrating better value beyond fee transparency, to redesigning their investment lineup with fewer (and smarter) investment options.
In a landscape dominated by legacy carriers with old technology, these changes will be slow to roll out and plan sponsors will find themselves scrambling to keep up.
Given OSFI and FSRAO’s status as regulatory heavy hitters and the strength of their community support, we think it’s safe to assume that these changes will move forward in some form. And when they do, advisors who are still selling legacy plans will find themselves selling yesterday’s solution to today’s problems.
The good news is that at Common Wealth, we’ve built a plan that puts members first, with modern features that already align to many of these guidelines. In a world of changing regulations, your best bet is a partner that already meets these standards.
Read up and get ahead
Our free e-book gives a detailed breakdown of these recommended changes, and how Common Wealth’s award-winning, innovative solution can help your clients get and stay ahead of regulatory change.