The CAP Guidelines define a Capital Accumulation Plan (CAP) as a tax assisted investment or savings plan that permits the members of the CAP to make investment decisions among two or more options offered within the plan. This includes defined contribution pension plans, group RRSPs and deferred profit sharing plans.
The guidelines are intended to support the continuous improvement and development of industry practices. As such, they reflect the expectations of regulators regarding the operation of a Capital Accumulation Plan, regardless of the regulatory regime applicable to the plan.
The intent of these guidelines is to:
When sponsors decide to establish a plan, they assume certain responsibilities in their role as a CAP sponsor. Sponsors may delegate their responsibilities within a CAP to a service provider. The CAP sponsor is responsible for: setting up the plan; providing investment information and decision-making tools to CAP members; introducing the plan to members; providing on-going communication to members; maintaining the plan; and, ensuring that termination of the plan or the membership of an individual within the plan is done in accordance with the terms of the CAP. CAP sponsors should clearly define and document why the Capital Accumulation Plan is being established.
The terms of the plan should be consistent with its purpose and what CAP members are told. The CAP sponsor should ensure that decisions about establishing and maintaining the plan, and information about how those decisions are made, are properly documented and that the documents are retained. The CAP sponsor should prepare and maintain the records of the CAP, either internally or through a service provider. The CAP sponsor should also establish a document retention policy for the plan.
CAP Guidelines are not intended to replace legislative requirements. However, they can be useful in helping sponsors meet their fiduciary responsibility. While the CAP Guidelines are voluntary in nature, the CAPSA (Canadian Association of Pension Supervisory Authorities) expects that registered pension plans that have CAP components will operate in accor-dance with the CAP Guidelines.
Should you have questions concerning your organization’s compliance with the guidelines explained in this article, please contact us.