CAPSA Upcoming Guideline Changes and Quebec Regulation Changes

May 07, 2024

The Canadian Association of Pension Supervisory Authorities (CAPSA) is proposing changes to:

  • Guideline No. 3 Capital Accumulation Plans (CAPs), and
  • introducing a Pension Plan Risk Management Guideline.

There’s also a proposed Quebec Supplemental Pension Plan Act regulation change.

Sun Life is aware of the proposed changes. Our industry has been engaged and is actively working with regulators from an advocacy perspective.

Highlights

CAP Guideline No. 3

Expected release date is June 2024 or later. We anticipate a similar transition period to when the guideline was first released in 2004.

CAPSA’s revised Guideline No. 3 Capital Accumulation Plans (CAPs) provides some necessary updates to modernize the guidance based on the current pension landscape. With a focus on innovation within products, increased plan governance, targeted disclosures to plan members, and changes to the regulatory environment. This is an important guideline to ensure plan sponsors, service providers and plan members are aware of their responsibilities involving capital accumulation plans (CAPs).

CAPSA Pension Plan Risk Management Guideline

CAPSA is working on a new Pension Plan Risk Management Guideline. This new guideline will outline best practices for how to establish a risk management framework to identify, evaluate, manage, and monitor material risks for a pension plan. The new guideline will complement CAPSA Guideline No. 4 (Pension Plan Governance) as well as other CAPSA Guidelines that refer to risk management. The guideline will also include special considerations on specific topics including third-party (outsourcing) risk, cyber security, and ESG.

Amendments to Quebec Supplemental Pension Plans Act Regulations

On December 27, 2023, the Quebec Government published draft regulations amending the Regulation respecting Supplemental Pension Plans. This is intended to offer greater flexibility in the use of retirement savings for those age 55 and older. The proposed changes will allow for eligible purchasers who want to, to withdraw larger amounts earlier in their retirement.

Current proposed effective date is July 1, 2024, for some communication activities and January 1, 2025, with the remaining regulatory changes. The final regulations have not been published, so these dates may change.

  • Proposed regulations will remove the LIF maximum withdrawal limit (no change to minimums) for those age 55 or older.
  • A maximum will still apply to members under age 55 but will be calculated differently.
  • The ability for members aged 55 and older, to withdraw as much as they want is proposed to be in effect for 2024 and would need to be communicated to all existing and new LIF members, that are 55 and over, effective July 1, 2024.
  • A new calculation of estimated life income is required from financial institutions for LIF members aged 55 and over.
  • Estimated life income will need to be communicated on account opening and in annual statements effective January 1, 2025.
  • The annual statement must also include:
    • Disclosure that the estimated life income amount is an estimate and could change because of withdrawals made and returns on the fund.
    • Assumptions for age of death and rate of return used in the calculation of estimated life income must be disclosed.

Next steps

You don’t have to take any action at this time. As the changes and implementation dates are confirmed, Sun Life will continue to provide you with updates.

Questions? We’re here to help.

Please reach out to your Sun Life Group Retirement Services Representative.