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Administration of Capital Accumulation Plans

The pension world is transforming itself and a new retirement paradigm has emerged.

Employer paternalism is quickly disappearing and the emphasis is changing to employee self-sufficiency

Ongoing economic pressures are forcing employers to justify the ROI of every dollar spent on benefits. A seismic shift has taken place in the pension world that has resulted in a move away from a defined benefit to a defined contribution or money purchase approach to saving for retirement. The once predominant defined benefit pension plans are being replaced by financial products known as Capital Accumulation Plans (acronym CAPs).

This fundamental change in approach is having dramatic implications for both employers and employees!

CAPs shift the onus onto employees to save and invest their own retirement money wisely. New skill sets and investment knowledge are required to do this properly. Employer responsibilities have not disappeared. Plan sponsors must ensure that they select the right CAP provider and choose and monitor appropriate investment funds. In addition, they must engage and educate plan members about their responsibilities.

ACAP, the acronym for Administration of Capital Accumulation Plans, has been developed by the Centre for Employee Benefits to address this need. ACAP is a unique interactive learning experience with content designed in consultation with a dedicated group of industry experts drawn from across Canada. We are indebted to the following Steering Committee members, and many others, who assisted us in putting the curriculum together for this new course:

Caroline Helbronner - Blake Cassels & Grayson LLP - Toronto
Greg Hurst - Morneau Sobeco - Vancouver
Elaine Noel Bentley - Independent Pension Consultant - Calgary
Matthew Rotenburg - Standard Life - Montreal
Bill Turnbull - Cooperative Superannuation Society Pension Plan - Saskatoon
Gretchen Van Reisen - GVR Consulting - Toronto

ACAP Modules

The ACAP modules cover five different CAPs and examine a variety of contemporary topics including design features; the regulatory and legal environment; CAP governance; marketing the CAP; financial literacy; CAP investments, behavioral finance research and communication.

The program consists of two one-week modules each of which includes four days of seminars and hands-on workshops. Topics are presented by recognized industry experts drawn from leading legal, consulting, insurance and investment organizations.

Case studies and practical exercises are used throughout and workbooks are provided as background to the presentations.

Administration of Capital Accumulation Plans 1

Administration of Capital Accumulation Plans 2

ACAP 1 - Seminar Content

Basic Module 1

Setting the Stage

An introduction to Capital Accumulation Plans (aka CAPs) and where they fit on the current spectrum of retirement savings plans in Canada:

  • The CAP landscape
  • Sources of Retirement Income
  • Understanding CAP terminology
  • The Major Players

Basic Module 2

CAP Mechanics

A more detailed look at the structure and design of CAPs (DC RPPS, GRRSPs, DPSPs, EPSPs, GTFSAs):

  • How CAP characteristics differ
  • Selecting the appropriate CAP(s)
  • CAP administration models
  • The importance of documentation

Basic Module 3

CAPs & the Law

An examination of how CAPs are regulated, including plan provisions, common law, legislation/regulations and fiduciary duties:

  • The legal basics
  • Rules that apply
  • Applicable federal and provincial legislation
  • Other guidelines

Basic Module 4

CAPs & Plan Governance

Through the use of case studies and lectures, learn what governance means for CAPs and how to assess the key elements of an effective CAP governance program:

  • What is CAP governance?
  • Why CAPs need governance
  • CAPSA’s pension governance guidelines
  • Joint Forum’s CAP Guidelines
  • Elements of an effective CAP governance system
  • A practical approach to implementing CAP governance

ACAP 2 - Seminar Content

Advanced Basic Module 5

Financial Literacy

The requisite skills and knowledge that enable individuals to comprehend the basic financial principles needed to make informed financial decisions and understand financial products that will impact their future well-being:

  • What is “Financial Literacy”
  • Determining Goal
  • Saving and growing CAP money
  • Understanding the costs
  • Planning for life events
  • Planning for retirement, etc.

Advanced Basic Module 6

Behavioural Finance & CAPs

The challenge faced by all employers is how to effectively engage employees in the retirement savings process. Behavioural finance research findings reveal plan design features that will improve employee decision-making.

Advanced Basic Module 7

CAPs & Investing

Available investment options, asset mix, and fees can all have a significant impact on CAP balances at retirement

  • Understanding how the Capital Markets work
  • The unitized funds concept & options for CAPs
  • Where risks, returns & costs come from
  • Mixing and diversifying assets, etc.

Advanced Basic Module 8

Turning CAPs into Income Streams

When the time comes to tap into CAP dollars, it is important to understand the options applicable to each plan. There is a need for a personal investment strategy that will integrate with retirement plans and future income requirements.

Advanced Basic Module 9

The CAP Communication Challenge

And in the end, it all boils down to communication and what is embedded in the organization’s Communication Policy. An effective policy will identify what you want to achieve, address CAP Guideline concerns, as well as how and when the message will be sent to plan member.