CAPITAL ACCUMULATION PLAN (CAP) GUIDELINES

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1 CAPITAL ACCUMULATION PLAN (CAP) GUIDELINES ROLES AND RESPONSIBILITIES OF DIFFERENT STAKEHOLDERS Displayed relevant to specific guideline sections

2 1 INTRODUCTION SECTION 1.1 DEFINITIONS Accompass Plan Sponsor Service Provider CAP Members A specialized team of consultants for group retirement plans aimed at not just helping corporate clients meet their fiduciary responsibility, but making sure that, at the same time, clients and their plan members receive maximum value from the plan. Employers, trade unions, associations, plan administrator of a Registered Pension Plan or any combination of these entities who establish CAPs Any provider of services or advice required by the CAP sponsor in the design, establishment, and operation of a CAP Individuals who have assets in a CAP. May include: active or former employees trade union or association members in certain cases may include spouses or common law partners SECTION 1.2 INTENT OF THE GUIDELINES DOES NOT REQUIRE LIST OF RESPONSIBILITIES SECTION 1.3 IMPLICATIONS Plan Sponsor Responsibilities Ensure the plan meets all legal requirements including those that may extend beyond the scope of these Guidelines Document all decisions relating to the type of plan and plan features Assume ultimate decision-making responsibility for the plan, bearing in mind that certain responsibilities are delegated to service providers Use available information and decision making tools to assist in making investment decisions within the plan Over and above the use of those tools provided within the CAP, consider obtaining advice from an appropriately qualified individual Role of Service Provider Comply with CAP guidelines and all legal requirements How Accompass can help Provide guidance on CAP objectives Provide education and guidance to CAP members to assist in making investment decisions

3 2 SETTING UP A CAP SECTION DEFINING THE PURPOSE OF A CAP Plan Sponsor Responsibilities Define and document the reason the CAP is being established If modifying the CAP s purpose, document the decision making process and expected impact upon CAP members Role of Service Provider How Accompass can help Develop Retirement Plan Policy Statement Develop governance model SECTION DECIDING WHETHER TO USE SERVICE PROVIDERS Plan Sponsor Responsibilities Determine if CAP sponsor meets the criteria required to carry out the responsibilities set out in these Guidelines as well as any other legal requirements Decide on whether or not service providers should be used and document the decision Role of Service Provider How Accompass can help Advise on the skills required to administer a CAP Advise on roles and responsibilities that can be delegated to service providers Advise on costs associated with using service providers SECTION SELECTING SERVICE PROVIDERS Plan Sponsor Responsibilities Establish and document criteria to be used in the selection of service providers Role of Service Provider Provide information on qualifications, services, and fees in the Proposal May provide a presentation and demonstration on the services they can provide How Accompass can help Provide initial and on-going advice in the following areas: plan design investment policy investment manager search and selection need for employee information and communication administration and pension committee Facilitate a comprehensive market review in order to evaluate current provider in relation to the competitive marketplace focusing on resources and offerings in the above-noted areas Advise on appropriate group retirement provider

4 SECTION SELECTING INVESTMENT OPTIONS SECTION SELECTING INVESTMENT FUNDS Plan Sponsor Responsibilities Select investment options and a default investment option that support the plan s purpose Consider legislative or legal limitations Ensure funds comply with appropriate rules such as: pension benefits standards legislation rules governing conventional public mutual funds Role of Service Provider Supply information on fund and fund manager attributes Supply information on Investment Manager Review process How Accompass can help Customize investment menu based on plan objectives Prepare Statement of Investment Policy and Procedures Search and advise on selection of investment manager Deliver quantitative and qualitative investment performance review using industry recognized database SECTION TRANSFERS AMONG INVESTMENT OPTIONS Plan Sponsor Responsibilities Determine the reasonable measures that will enable members to transfer between options at least quarterly Communicate to CAP members the process, restrictions, and any applicable fees for making transfers between options Role of Service Provider Ensure standard policies do not restrict members ability to transfer between options at least quarterly How Accompass can help Advise on the reasonable measures that will enable plan members to transfer, bearing in mind: CAP purpose liquidity of investment options number of available options risks associated with those options Advise on limitations or fees pertaining to transfers Advise on CAP member communication

5 SECTION POLICY REGARDING FAILURE TO MAKE INVESTMENT CHOICES Plan Sponsor Responsibilities Establish and document a policy outlining what happens if a CAP member does not make an investment choice Select a default option in accordance with the plan s purpose Communicate policy to members before any action is taken Role of Service Provider How Accompass can help Advise on default option in relation to Plan Objective Advise on member communication SECTION 2.3 MAINTENANCE OF RECORDS Plan Sponsor Responsibilities Establish a document retention policy Ensure documents are retained according to the policy Ensure plan record keeping is in place Role of Service Provider Provide plan sponsor with details of provider s internal record keeping procedures How Accompass can help Advise on: the types of documents that should be retained who should have access to them how long documents should be kept Document decisions on the above as well as any other decision making processes pertaining to document retention

6 3 INFORMATION AND DECISION MAKING TOOLS SECTION 3.1 TO 3.3 INVESTMENT INFORMATION AND DECISION MAKING TOOLS Plan Sponsor Responsibilities Decide on the information and decision making tools to offer to CAP members Review the cost of providing the decision making and information tools and ensure the cost and method of delivery will not discourage members from using the tools Take advantage of tools offered which will assist in decision making and information gathering Role of Service Provider Offer tools in a variety of formats Ensure tools are easy to understand How Accompass can help Provide direction on the providers employee education and communication tools Review other communication options, either value added or for a fee, depending on scope of project Formulate a retirement communication plan in collaboration with the plan sponsor and group retirement provider that is specific to the organization and the plan s objectives Offers five financial planning calculators at accompass.com at no cost to CAP members SECTION 3.4 INVESTMENT ADVICE Plan Sponsor Responsibilities Determine company position on whether or not to provide personal investment advice to plan members (through a service provider) If yes, establish criteria to be used in selecting the provider Role of Service Provider How Accompass can help Provide direction to CAP members through one of our licensed advisors as follows: Guide a member to pre-determined portfolios that are selected based on a member s risk profile Refer a member to a financial advisor, if necessary Notes: 1 Accompass receives no financial compensation for referrals. 2 Accompass does not sell individual products such as life insurance or mutual funds.

7 4 INTRODUCING THE CAP TO CAP MEMBERS SECTION INFORMATION ON THE NATURE AND FEATURES OF THE CAP SECTION OUTLINING THE RIGHTS AND RESPONSIBILITIES OF CAP MEMBERS Plan Sponsor Responsibilities Provide information on the purpose of the plan, nature and features of the plan, members roles, and responsibilities to an employee when he/she becomes eligible to enroll in the CAP Role of Service Provider Provide enrolment material in easy to understand language Materials may include: website access and/or call center access booklet meetings How Accompass can help Deliver and advise on: employee communication / enrollment sessions comprehensive investment information on risk, transfer options, and other related investment information investment selection and planning tools SECTION INVESTMENT FUNDS SECTION EMPLOYER SECURITIES SECTION OTHER INVESTMENT OPTIONS Plan Sponsor Responsibilities Provide CAP members with sufficient detail about the available investment options so they can make informed investment decisions Review all materials and make an informed investment decision Understand options for obtaining additional information or guidance Role of Service Provider Provide reports that comply with CAP Guidelines on all investment choices Provide information that complies with CAP Guidelines on fund performance of all investment options available in the CAP How Accompass can help Provide direction on the group retirement provider s investment information and decision making tools Provide direction to plan members through one of our licensed advisors if plan sponsor has decided to provide investment advice through a service provider

8 SECTION 4.3 TRANSFER OPTIONS Plan Sponsor Responsibilities Provide CAP members with information on how to make transfers among investment options, including details on forms, fees, methods of transfer, and any restrictions Understand the rules and methods for making transfers between investment options Role of Service Provider May include information in member booklets, on website, and through call centre access How Accompass can help Offer direction to plan members by providing education on investment options Assist members on completing necessary forms and/or by processing transfers on the service provider s secure website Advise on event-specific communication when transfers may be required or restricted SECTION 4.4 DESCRIPTION OF FEES, EXPENSES AND PENALTIES Plan Sponsor Responsibilities Provide CAP members with the description and amount of all fees, expenses, and penalties relating to the plan that are borne by the members Understand all fees, expenses, and penalties that will be borne by the CAP member and understand the method of payment Role of Service Provider Provide communication to members on all fees that may be borne by the member Update communication if fees, expenses, or penalties change How Accompass can help Provide direction to plan members by offering education on all fees, expenses, or penalties that may be borne by the member Advise on event-specific communication when fees, expenses, or penalties borne by the member change SECTION 4.5 ADDITIONAL INFORMATION Plan Sponsor Responsibilities Provide CAP members with an outline of how they can access additional information related to the plan Role of Service Provider How Accompass can help Advise on member communication

9 5 ONGOING COMMUNICATION TO CAP MEMBERS SECTION 5.1 MEMBER STATEMENTS Plan Sponsor Responsibilities Provide CAP members with a statement of their account at least annually Provide paper copies of the statement if another format (i.e., online statements) is standard Ensure contact information (such as home address if paper statements are mailed) is current Review statement of account Role of Service Provider May make member statements available anytime via secure website Ensure member statements contain all information required under CAP guidelines How Accompass can help Advise on group retirement provider s member statement content including: standard method of delivery frequency of pro-active distribution costs associated with ad-hoc member statements Provide education and/or guidance to members if questions arise after reviewing member statements SECTION OTHER INFORMATION AVAILABLE TO CAP MEMBERS SECTION REPORT ON SIGNIFICANT CHANGES IN INVESTMENT OPTIONS SECTION ADDING AN INVESTMENT OPTION

10 SECTION REMOVING OR REPLACING AN INVESTMENT OPTION Plan Sponsor Responsibilities Provide members with access to additional information regarding their CAP account. May include details on: investment funds, both market based and guaranteed funds transactions contributions Report on significant changes in investment options, including adding, removing or replacing investment options Review CAP account periodically and make changes as necessary Role of Service Provider Notify CAP sponsor of any significant changes in investment options Provide performance reports on all investment options that include all information necessary to comply with CAP guidelines How Accompass can help Advise throughout the year on the timing of actionable communication tasks that will help sponsors meet requirements Provide draft communication of changes to investment menu as well as information on how plan members can make informed decisions Direct employees to investment fund information Provide clients and their employees with five financial planning calculators found at accompass.com. These are: 1 Retirement Planning Calculator How will my savings grow? 2 RRIF Payout Calculator How long can I live off my savings? 3 Home Budgeting Calculator Where is my money going? 4 RRSP Loan Calculator How will a loan help my retirement savings plan? 5 Net Worth Calculator How much am I worth? SECTION 5.3 PERFORMANCE REPORTS FOR INVESTMENT FUNDS Plan Sponsor Responsibilities Provide CAP members with performance reports for each investment fund at least annually Role of Service Provider Provide performance reports on all investment options that include all information necessary to comply with CAP guidelines How Accompass can help Assess and report on investment performance Recommend changes if necessary

11 6 MAINTAINING A CAP SECTION 6.1 REVIEWING SERVICE PROVIDERS Plan Sponsor Responsibilities Establish criteria for periodic review of service providers Use these criteria to review the service provider it engages Decide what action should be taken if a service provider fails to meet the established criteria Role of Service Provider Make available the results of the independent auditor s annual audit of service provider controls and procedures Provide audited financial statements Provide details of other internal controls and procedures, for example, privacy guidelines or service standards How Accompass can help Assist in formulating review criteria for group retirement provider Periodically review competitiveness of providers Assess and report on plan effectiveness Document and interpret results Recommend changes if necessary SECTION 6.2 REVIEWING SERVICE PROVIDERS WHO PROVIDE INVESTMENT ADVICE Plan Sponsor Responsibilities Establish criteria for periodic review of service providers Use these criteria to review the service provider it engages Role of Service Provider How Accompass can help Determine if advisor maintains licensing requirements in good standing Determine if advisor meets requirements around education SECTION 6.3 REVIEWING INVESTMENT OPTIONS Plan Sponsor Responsibilities Establish criteria for periodic review of each investment option in the plan (review at least annually) Decide what action should be taken if an investment option fails to meet the established criteria Role of Service Provider Provide details on investment performance and fund manager reviews How Accompass can help Assist in formulating review criteria for investment options (as per Statement of Investment Policy and Procedures) Assess and report on qualitative and quantitative measures of each investment option Document and interpret results Recommend changes if necessary Assist in member communication if necessary

12 SECTION 6.4 REVIEWING MAINTENANCE OF RECORDS Plan Sponsor Responsibilities Periodically review how well the plan s records are being maintained Take action if necessary Role of Service Provider May conduct internal quality audits on plan records and processes Make available the results of the independent auditor s annual audit of service provider controls and procedures How Accompass can help Assist in formulating review criteria Document and interpret results Recommend changes, if necessary SECTION 6.5 REVIEW DECISION MAKING TOOLS Plan Sponsor Responsibilities Periodically review any decision making tools provided to CAP members Role of Service Provider Ensure the decision making tools available to CAP members include all requirements necessary to comply with CAP guidelines How Accompass can help Assist in formulating review criteria Document and interpret results Recommend changes, if necessary

13 7 TERMINATING A CAP SECTION 7.1 TERMINATING A CAP SECTION 7.2 TERMINATING A CAP MEMBER S PARTICIPATION IN THE PLAN Plan Sponsor Responsibilities Terminate the CAP in accordance with the terms of the plan and any applicable legal requirements Promptly provide information to CAP members Communicate all options available to CAP members including: required actions deadlines for action taken default options if no action taken by deadline impact of termination on each investment option Make decisions in accordance with the terms of the plan and any legal requirements Understand implications of action taken or of default option if no action taken Role of Service Provider Provide detailed information on the termination processes based on plan type and any legal requirements Provide communication to members on all available options and deadline for action May offer continuing group retirement plan for terminated members How Accompass can help Supply written samples of termination notifications that would be sent to both employees and authorities Assist throughout termination process Help members understand option statements 1052 Yonge Street, Toronto, Ontario M4W 2L1 Canada Tel Toll Free Fax accompass.com

Guideline No. 3 MAY 2004 GUIDELINES FOR CAPITAL ACCUMULATION PLANS

Guideline No. 3 MAY 2004 GUIDELINES FOR CAPITAL ACCUMULATION PLANS On May 28, 2004, the Joint Forum of Financial Market Regulators released a final version of the Guidelines for Capital Accumulation Plans