1. Revised CAP Guidelines
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So the first change in the revised guidelines for 2024 is what qualifies as a cap plan. It still includes plans like registered pension plans and group RRSP's. But the revised guidelines now off also include new products like tax free savings accounts, first home savings accounts. Even though first home savings accounts haven't quite made it to the group market, they're allowing space for that in the future
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and RESP's. So, anything that you offer in terms of a tax assisted program, note that nonregistered programs wouldn't qualify, would qualify as a CAP plan.
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Initially the guidelines like I mentioned were rolled out in 2004 and they've just been revised in 2024. And the reason for that revision are a few things. One is the growth of assets in the DC marketplace. So significant growth in assets to are the are new investment options that are made available to for your planned members to invest in. And then #3 is the push for everything digital, right? Everything is online now. And so, the CAP
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guidelines are including provisions that talk about the digital framework.
2. Key themes to thrive
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So what are the key themes that are coming out of the 2024 guidelines
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from what, from the work that we've done as a team, what we see coming out loud and clear is the support on member outcome. This is support to member outcomes. And so, in 2004, the guidelines really talked about investment options, how to help members make investment choices, what how many investment choices you should offer. The 2024 guidelines are really talking about how you can positively impact members outcomes in retirement.
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And so, this, like I said, oh, I did it, Leanne,
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as I mentioned at the beginning of the presentation, this is my passion is to help employees thrive in retirement and to work with employers in building education and communication strategies. And so, I really believe that the revised guidelines are helping each and every one of you get to that positive and member outcome. And the way that we're going to achieve that is through education, education, education and through best practices. So, I'll talk about each of these 3 themes
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in a little more detail. By the way, anyone know? I put educate, educate, educate 3 times. Anyone know how many times someone has to hear something before they actually remember it? Yeah, 6, three to seven times. Yeah. Interesting. So that means I get to do this presentation three more times after this. Just kidding,
3. Good governance is important
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OK, so let's talk about the last topic, which is best practices and this one being governance. I think we can all agree in the room, good governance is important, right? We should all practice good governance.
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The revised CAP guidelines are saying that all CAP plan sponsors should have a governance framework established. Now, that word is should. And the reason that it should is because remember, the CAP guidelines are not legislation, right? It's just a set of industry best practices. I shouldn't say just it is a set of industry best practices. And if you were to ever be challenged by any of your employees, taken to court for a decision that was made around the plan,
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the courts would look to the CAP guidelines and expect you to be following them. So, you need to make sure that you understand them and that you're you had the tools in place to follow the CAP guidelines
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from a governance standpoint,
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likely many of you already have many of these things covered off in your policies, right? So, you might have a risk management policy that's already in place for your organization, but is your pension plan or your retirement savings plan included in that risk management policy? So, are you thinking about things like, what is the risk if my employees don't participate in the plan? What is the risk? If my employees don't contribute the maximum in their retirement savings plan, What is the risk
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if they don't select an active investment default or an active investment selection?
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The other thing is, is that CAPSA is saying in this case as well, your governance framework is going to depend based on the size of your cap plan. So again, the smaller plans you would expect to have a simpler, a less complex governance framework, Larger plans you would expect to have something a little more robust. So, this is where you're really going to lean on your carrier partners, your trusted partners like Cowen in the coming weeks,
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months to go through your governance framework to establish what you have in place today, maybe what you're missing and then get those things put in place for the coming year.
4. Investments need an ongoing review
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OK. So, from an investment perspective, a lot of this is not new, right? We're already doing in practice many of these things. If any of you have been with any of the consultants in the room attending an annual plan review, you will know that we talk at nauseam sometimes about the investment options that are offered in your in your portfolio.
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So it's not necessarily new, but I think it is really important to reiterate because it is an important piece of your overall retirement program, and it is not a set it and forget it task. It's not something that you can do once, and you never have to worry about it. It is something that we do with our clients at least on an annual basis so that we're reviewing things like number of choices offered, you know, number of choices has really evolved over the years and the retirement market space. I've been in the industry for 28 years as well,
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Dan, and 28 years ago we had three investment options that were available. Trimark probably had a balanced fund, we had GIC's and maybe a money market fund, not a lot of choices. The pendulum has completely swung in the opposite direction where record keepers were making hundreds of investment choices available to their cap plan members. Then we found out that is way too many choices and members aren't doing anything. So now rather than helping them, we're
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we're paralyzing them from being able to make a decision on where their assets are invested.
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Now the pendulum has come back. So, we're somewhere between 15 and 25 investment options being offered on a group retirement platform. And that's important for members. Like I said, we don't want to call cause paralysis members not able to choose because there's too many choices, they're overwhelmed. But it's also important for you as a as a cap plan sponsor from a governance standpoint, if you're responsible for reviewing your investment platform on an annual basis, the more choices you have, the more difficult
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that process that process is. So, number of choices is important for you as a plan sponsor, but it's also important for your members.
5. Next steps
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OK, so when do these changes need to be implemented? Ideally as soon as possible. Having said that, there is allowance in the guidelines that CAPSA is saying if there are system changes or process changes that you need to put in place, you have until January 1st, 2026, to implement those changes. Really, it's giving the record keepers an opportunity if there are changes that they need to make, an opportunity to have time to make those changes. 14 months is
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seems like today a long way away, but we know how quickly that time goes by. And so, we'll be working with all of our clients in the coming weeks and months to help you understand the CAP guidelines and how it applies to your program.
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There is recognition also in the guideline that says that the implementation of these guidelines is going to depend on the size and complexity of your overall cap plan. So, this assuming presumably your smaller cap plans will have a different may follow a different process than your bigger cap plans.