CAP Self-Assessment Tool

Transcription

1 CAP Self-Assessment Tool

2 Benchmark your current practices The Joint Forum of Financial Market Regulators released the final version of the Capital Accumulation Plan (CAP) Guidelines on May 28th, The CAP Guidelines are intended to outline and clarify the rights and responsibilities of CAP sponsors, service providers and CAP members, and to ensure that CAP members are provided the information and assistance that they need to make investment decisions in a capital accumulation plan. This CAP Self-assessment Tool will help you determine your level of compliance with the CAP Guidelines. Please consult with your benefits consultant or plan advisor when reviewing your capital accumulation plan and your compliance with the CAP Guidelines. How to use the CAP Self-assessment Tool 1. Answer the questions on the following pages by choosing the appropriate box and keying your detailed response(s) in the space(s) provided. Beside each question is a summary of the service(s) Sun Life Financial Group Retirement Services (referred to in this document as SLF ) already provides (or can provide) to support you in this regard. 2. You may edit your responses at any time. 3. When you have completed the self-assessment, print a copy for your file. This tool could be a useful part of your overall plan governance documentation. As this document is in an Adobe Acrobat (PDF) file format, the document cannot be saved with your answers. te: Sun Life Financial may be only one of various suppliers you use to deliver a CAP. You will want to review each question included in this tool with each of the suppliers you use. Sun Life Financial assumes no liability with respect to the use of this tool. mm/tw 11_05_e This document cannot be saved with your answers.

3 Definitions and roles/responsibilities: SECTION 1 2 When reading the CAP Guidelines, it is important to understand what is defined as a capital accumulation plan and what are the responsibilities of each of the parties involved plan sponsor, plan member and service provider. Following are the definitions and explanations of responsibilities contained in the CAP Guidelines. Capital Accumulation Plan A capital accumulation plan is a tax assisted investment or savings plan that permits the members to make investment decisions among two or more options offered within the plan. This may include a defined contribution registered pension plan; a group registered retirement savings plan or registered education savings plan; and a deferred profit sharing plan. CAP Sponsors Employers, trade unions, or associations that establish capital accumulation plans are referred to as CAP sponsors. If the CAP is a registered pension plan, many of the responsibilities of the CAP sponsor are those of a pension plan administrator. When CAP sponsors decide to establish a plan, they assume certain responsibilities. These responsibilities could be delegated to a service provider. Broadly speaking, 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 communication should use plain language and be in a format that ensures readability, Maintaining the plan, 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, and Meeting any applicable legal requirements, including any requirements that may extend beyond the scope of the Guidelines. The CAP sponsor should ensure that all decisions regarding the establishment and maintenance of the CAP and the process for making those decisions are properly documented and the documents retained. They should also be made with a view to the purpose behind the creation of the CAP.

4 SECTION 1 3 Service Providers Service providers include any provider of service or advice required by the CAP sponsor in the design, establishment and operation of a CAP. The CAP sponsor may delegate responsibilities outlined in the Guidelines to a service provider in which case the service provider is responsible for following the Guidelines and any applicable legal requirements. Service providers engaged by CAP sponsors should have the appropriate knowledge and skill to perform the tasks they are delegated and to provide any advice within their area of expertise requested by the CAP sponsor. CAP Members CAP members are individuals who have assets in a capital accumulation plan. This may include active or former employees; trade union or association members; and in certain cases, their spouses or common law partners. CAP members are responsible for making investment decisions within the plan and for using the information and decision-making tools available to assist them in making those decisions. In addition, CAP members should also consider obtaining investment advice from a qualified individual.

5 SECTION 1 4 Investment Options The investment options that may be offered in a CAP are governed by legislation. Sponsors must comply with applicable legislation when choosing the options for the CAP. Examples of investment options include: Investment funds, Guaranteed investment certificates (GICs), Annuity contracts, Employer securities, Government securities, Other securities, and Cash. In the Guidelines, the term investment fund refers to a mutual fund, pooled fund, segregated fund or similar pooled investment product. If investment funds are offered in a CAP that is a registered pension plan, the funds must comply with the investment rules under applicable pension benefits standards legislation. If the investment fund is a mutual fund under securities law, the fund must comply with the investment rules that govern conventional public mutual funds. As of the date of the release of the final Guidelines (May 28, 2004) the mutual fund must comply with the investment rules under National Instrument Mutual Funds. If the investment fund is an insurance product, the fund must comply with: The investment rules applicable to individual insurance contracts; or The investment rules that govern conventional public mutual funds; or The investment rules under applicable pension benefits standards legislation.

6 Setting up a CAP SECTION Does your CAP have a clearly defined purpose? Somewhat t sure If : a. Have you documented the purpose? If so, how? b. Has your CAP s purpose been communicated to plan members? If so, how and when? Your Sun Life Financial Group Retirement Services representative can assist you and provide sample Statements of Purpose as well as help develop a plan to communicate the purpose to your plan members. c. Have you established a regular review and communication timetable? If Somewhat, or t sure: When will you have a defined purpose? Who will develop it? How and when it will be communicated? te: If at a later date you decide to change the purpose of the plan, the modified purpose of the plan should be documented and communicated in a similar manner as above.

7 SECTION Are you confident that members understand their responsibilities within the CAP? Somewhat t sure If : a. How (face-to-face, print, electronic, etc.) and how often (quarterly, yearly, during initial enrolment, etc.) have these responsibilities been communicated to them? If Somewhat, or t sure: How and when will you communicate to members about their CAP responsibilities? Member responsibilities in a CAP are outlined on the Sun Life Financial Plan Member Services website as well as in our what? me save? Guide to Saving and Investing. Your Sun Life Financial Group Retirement Services representative can help you develop a plan to communicate to your plan members to ensure they understand their responsibilities with the CAP. 3. Have you documented the criteria used to select service providers (e.g. professional training; experience; quality; level and continuity of services offered, etc. Please refer to Section of the Guidelines)? Your Sun Life Financial Group Retirement Services representative can provide an overview of SLF s capabilities with respect to the CAP Guidelines.

8 SECTION Have you documented each service provider s role and responsibilities? 5. In selecting the CAP s investment options, did you consider the following: The appropriate number and type of investment options to reflect the purpose of the CAP? The legal limitations on the types of investments that may be offered for your particular CAP? The fees associated with the investment options? The help of a service provider in selecting appropriate investment options? Your ability to periodically review the options selected? The diversity and demographics of your CAP members? The liquidity of investment options? The degree of diversification among investment options available? The level of risk associated with the investment options? Reasonable opportunities for plan members to transfer freely among options (at least quarterly)? Comments: Our Service & Fee Agreement describes SLF s role and responsibilities. Through our comprehensive Investment Manager Program (IMP), we offer a broad selection of investment options and the flexibility for plan members to transfer among funds. The IMP combines essential aspects of manager oversight (investment manager selection, monitoring and review, communication and pricing) with access to detailed fund information and analysis via Morningstar Canada, a third party supplier, to support sponsor fund selection. In addition, the Plan Sponsor Services website provides current rate of return information as well as reports illustrating member demographic information. Sun Life Financial also offers a comprehensive range of guaranteed investment options. Your Sun Life Financial Group Retirement Services representative and your Education Specialist can work with you to help assess the diversity and demographics as well as financial knowledge of your plan members. They can then assist you to develop an education strategy specific to the needs of your plan members.

9 SECTION In selecting the CAPs investment funds, did you consider the following? The attributes of the investment funds such as the investment objectives, investment strategies, investment risks, the manager(s) historical performance and fees? Whether the investment fund(s) selected provide CAP members with options that are diversified in their styles and objectives? * te: The investment funds must comply with the investment rules applicable to the type of investment fund. Please refer to section of the CAP Guidelines. 7. Have you established a policy to deal with plan members who fail to make investment choices? If : a. Have you documented it? b. Has it been communicated to plan members? c. Have you established a regular review timetable for this policy? If : When will you have a policy? Who is responsible for its development? How will it be communicated to plan members? Through our comprehensive Investment Manager Program (IMP), we offer a broad selection of options. The IMP combines essential aspects of manager oversight (investment manager selection, monitoring and review, communication and pricing) with access to detailed fund information and analysis via a third party supplier to support sponsor fund selection. In addition, the Plan Sponsor Services website provides current rate of return information. Sun Life Financial also offers a comprehensive range of guaranteed investment options. A default option, carefully selected with regard to the purpose of the CAP, might form the core of such a policy. Your Group Retirement Services representative and an SLF Investment Services Executive, working with your benefits consultant or plan advisor, can help you to establish such a policy and then communicate this policy to your plan members. Your Education Specialist can also work with you to create a customized education and communication plan to ensure that your plan members are aware of all of their investment options and the value of creating an asset mix strategy.

10 SECTION Have you developed a recordkeeping and document retention program for your CAP? If : a. Have you documented it? b. Have you established a review timetable for it? Annually Quarterly If : When will you have a recordkeeping and document retention program? Who is responsible for its development and maintenance? The annual business plan prepared by your Group Retirement Services representative can help form part of your recordkeeping and document retention program. In addition, our independent, semi-annual ISO 9001:2000 audit helps assure plan sponsors that member records are maintained using carefully monitored and controlled business practices. Our document retention policy describes the types of documents we retain as a service provider as well as the length of time the document is retained. We regularly review and update our Document Retention Policy.

11 SECTION 3 10 CAP Self-assessment Tool Investment information and decision-making tools 1. In determining appropriate decision-making tools, did you consider: The purpose of the plan? The types of decisions members must make? Costs of the information and decision-making tools? The location, diversity of plan members (example: language, physical abilities)? Members access to computers and the Internet? Our multi-language service available through our Customer Care Centre gives plan members the ease and confidence of discussing their retirement plan in their own language. A hearing-impaired line is also available. In addition, key decision-making tools are available in large print for plan members who have impaired vision. The Asset Allocation tool and Retirement Planner are both available in print for those members who do not have access to the Internet. 2. Do you provide CAP members with investment information that covers the following: How investment funds work? Investing in securities (stocks, bonds)? The relative expected risk and return for various investment options? Glossaries of investment terms? Product guides? Performance reports for any investment options offered in the CAP? Our multi-media plan member communication and education program covers substantially all aspects outlined in the Guidelines. In addition, your Sun Life Financial Education Specialist can work with you to develop an education strategy specific to the needs of your plan members.

12 SECTION Do you provide CAP members with the following decision-making tools: Asset Allocation Models? Retirement planning tools to help members estimate retirement income needs? Calculators and projection tools? Investor Profile tools to help members selfassess risk tolerance? 4. Do you make investment advice available to CAP members? If : How is the investment advice delivered? Face-to-Face Electronically Print (newsletter/bulletin) ne Other: Sun Life Financial provides plan members with a number of interactive decision-making tools focused on retirement planning including the Investment Risk Questionnaire (an asset allocation tool), Retirement Planning Tool, Budget Calculator, Investment Return Calculator and Net Worth Calculator via the Plan Member Services website at In addition, paper-based worksheets for the Investment Risk Questionnaire and the Retirement Planner are available on their own and in the what? me save? Guide to Saving and Investing. Key decision-making tools are also available in large print for plan members who have impaired vision. Early in 2006, we will launch new and improved decision-making tools. Sun Life Financial can provide access to advisory services that can be tailored to meet your needs if you choose to offer advice to your plan members. Advice can be limited to investments or extended to full personal financial planning services and can be delivered by phone or face-to-face.

13 SECTION Have you recommended that CAP members access additional investment advice independently? 6. If you have selected a service provider to deliver investment advice to CAP members, did you consider: The professional qualification/licensing/ accreditation of the advisor? The professional reputation of the advisor? The advisor s experience with employee benefits, pension legislation and related rules? The overall corporate stability of the organization? Any real or perceived lack of independence/ conflict of interest? The advisor s ability to deliver a consistent level of service in all regions? Any complaints filed against the advisor or his/her firm and any disciplinary actions taken (if any) In both the what? me save? Guide to Saving and Investing (online and in paper) and in education sessions, plan members are advised to consider independent investment advice from investment or financial planning professionals. This message also appears on the Plan Member Services website and is included in plan-specific communication where appropriate. SLF can provide access to advisory programs that can be tailored to suit the needs of your plan. Individual advice can be limited to investment planning or extended to full personal financial planning, and can be delivered by phone or face-to-face. Fees will depend on the type of service and where it is delivered. Your SLF GRS representative can provide detailed information about these services including the qualifications of the advisors. 7. If you currently make plan member information available to third parties, have you obtained written individual plan member consent to do so? Sun Life Financial has developed consent language and obtains a CAP member s consent where needed. For further information on our Privacy Policy, please refer to the Plan Sponsor Services website or

14 Introducing the CAP to plan members SECTION When an individual becomes eligible to enrol in a CAP, do you clearly communicate the overall purpose of the plan and how it operates, and specifically, the following information: Contribution levels? Investment options, including how to make and change them, and how long it will take for choices to be implemented? Plan member responsibilities (as per Section of the Guidelines) and right to access information? The policy regarding failure to make investment choices? Names of service provider(s) with whom CAP members interact? SLF provides CAP members with detailed and comprehensive plan information through: the Plan Member Welcome Kit and through a number of other paper-based communications, face-to-face (enrolment meetings, information sessions), and the Plan Member Services website. We have reinforced plan member responsibilities in online and customized communications. The new Enrolment Guide, which will be launched in 2006, will also include information on plan member responsibilities. We also reinforce members' right to access plan information through the Plan Member Services website, plan member statements and custom communications. 2. Have you provided the following investment fund information to plan members: The name of investment fund? The names of all investment management companies responsible for the day-to-day management of fund assets? The investment objective of the fund? The types of investments held in the fund? A description of risk associated with the fund? Where and how members may get more information about fund holdings and other detailed disclosure about the fund? Upon enrolment, Sun Life Financial provides plan members with a comprehensive package of information that covers essentially all of the CAP Guidelines requirements. Our multi-media education and information program coupled with 24/7 access to the Plan Member Services website and to a third party's detailed fund information, gives members ongoing access to updated information to make informed decisions.

15 SECTION 4 3. Is the information described in the previous question available to CAP members for stock or guaranteed investment options? t Applicable Information on other investment options in the plan such as stock and guaranteed investments is available online through the Plan Member Services website Have CAP members been given information about how to make transfers among investment options, including the following: Forms required to effect transfers and where they must be sent? Other ways of making transfers (e.g. Internet, IVR)? Any costs for transferring among options? Restrictions or limits on transfers (example: maximum limits after which a fee may apply)? Circumstances, if any, in which transfer options may be suspended? Sun Life Financial provides information on how to make transfers among investment options in the Plan Member Welcome Kit provided at enrolment. Details of restrictions or limits on transfers are included in the plan booklet. Information would be provided in advance where transfers are suspended due to a change of options, a change of service provider, or a change in our services. te: Sun Life Financial has a Short-Term Trading policy whereby plan members are charged a 2% fee, payable to the fund, when they initiate an interfund transfer into a fund followed by an interfund transfer out of the same fund within 30 calendar days. This fee is not charged for transactions in guaranteed investments, directly held stock and money market funds, and does not apply to deposits on withdrawals, just interfund transfers.

16 SECTION Have you provided CAP members with detailed information about all fees, expenses and penalties that are to be paid by them including: Any costs that must be paid when investments are bought/sold? Investment fund management fees? Investment fund operating expenses? Recordkeeping fees? Any costs for transferring among investment options? Account fees? Fees for services provided by service providers? Costs associated with accessing or using any of the investment information, decision-making tools or investment advice provided by the CAP sponsor. Comments: 6. Have you provided CAP members with an outline of how they can access additional information related to the plan and a description of the type of information that is available? Any transaction costs are detailed in the plan booklet provided in the Plan Member Welcome Kit. There are no costs to the plan member for accessing investment information or decision making tools. The provision of investment advice would be a program set up with the plan sponsor details of the program and any associated costs would be communicated to the plan members. Segregated fund administration expenses are disclosed in the annual report available to sponsors both in paper and on the Plan Sponsor Services website. We disclose plan member borne fees on the Plan Member Services website and by December 31, 2005, we will include a Fee Summary Statement on plan member statements. te: Fees may be disclosed in aggregate, except where they are driven by a plan member s decision (e.g. a withdrawal). SLF provides plan members with a comprehensive package of information at enrolment that includes detailed plan information as well as information on how to access both plan and account information on the Plan Member Services website, through the Automated Telephone System or the Customer Care Centre. The plan member statement also refers members to the Customer Care Centre and the Plan Member Services website for additional information.

17 Ongoing communication to members SECTION How often do you provide statements to CAP members? Annually Semi-annually Quarterly Monthly Never 2. Can CAP members request a paper copy of their statement if it is provided in another format? 3. Do plan member statements include all the information required as stated in Section 5.1 in the CAP Guidelines? 4. Do plan member statements include personal rate of return for CAP members? Is the calculation and method for calculation of the personal rate of return explained as per Section 5.1 of the CAP Guidelines? SLF issues member statements at least annually. SLF issues plan member statements online and in print. Plan member statements currently include information appropriate to each plan type. By December 31, 2005, the plan member statement will also include a Fee Summary Statement as well as information on how to obtain more details on fund performance and relevant benchmarks. Plan member statements can show personal rates of return. They also refer plan members to the Plan Member Services website for more details on their Personal Rate of Return (PROR). By December 31, 2005, the statement will explain the method used to calculate the Personal Rate of Return.

18 SECTION Have you informed members that they may request additional information regarding their CAP accounts as stated in Section of the CAP Guidelines? 6. How do you provide information to CAP members when there are significant changes to investment options (i.e. changes to the nature or operation of the option itself; the addition, substitution or removal of an option and any deadlines, changes to member-paid fees or expenses; changes in service providers)? Face-to-Face Electronically Print (newsletter/bulletin) ne Other: All of the above SLF advises plan members of their right to request additional information regarding their CAP account and the performance of the investment funds in their plan through customized communications and the plan member statement. We also reinforce their right to request additional information in their Enrolment Guide and on the Plan Member Services website. SLF will work with plan sponsors to ensure that when there is a change in investment options, plan members receive all of the information as required by the CAP Guidelines. If the change involves multiple investment options, you can work with your Education Specialist to develop a comprehensive education strategy to ensure that plan members fully understand their new investment options. Does this information include all the required information as stated in Section of the CAP Guidelines?

19 SECTION How often do you provide performance reports to CAP members for investment funds? Annually Semi-annually Quarterly Monthly Never Information of fund performance is available in the Enrolment Guide, through Morningstar Canada via the Plan Member Services website, and the Customer Care Centre. Morningstar Canada provides investment information for one, three, five and 10 year returns. The Plan Member Services website provides performance reporting for one-month, year-to-date, one year and five year returns. Plan member statements show one month, year-to-date, one year and five year rates of return.

20 SECTION Do performance reports include the following information? Name of the investment fund for which performance is being reported? Benchmarking information? Returns for corresponding benchmarks? Performance over 1-, 3-, 5-, and 10-year periods? Whether fees have been accounted in performance numbers? Identification of method used to calculate fund return, and directions on where to find a more detailed explanation? Explanation that past performance is no indication of future performance? Information on fund performance is available in the Enrolment Guide, through Morningstar Canada via the Plan Member Services website, and the Customer Care Centre. Morningstar Canada provides investment information for one, three, five and 10 year returns. The Plan Member Services website provides performance reporting for one-month, year-to-date, one year and five year returns. Plan member statements show one month, year-to-date, one year and five year rates of return. Morningstar Canada identifies the benchmark name, description for each fund and returns for each benchmark. Currently, the plan member statement shows a Personal Rate of Return (PROR) and refers members to the Plan Member Services website for more details about the Personal Rate of Return. By December 31, 2005, we will explain on the statement, the method used to calculate the PROR.

21 Maintaining the CAP SECTION How often do you evaluate service providers against the original criteria used to select them? Annually Semi-annually Quarterly Monthly Comments: Event-Triggered We provide you with information on our processes and performance through our Service Standards Report Card, the CICA Handbook Section 5900 Audit Report (CICA Handbook Section 5970 Audit Report beginning 2006) and the independent semi-annual ISO 9001:2000 audit. We monitor your satisfaction with our products and services through our annual Client Loyalty and Member Loyalty Indices. These reports and surveys give you the information and input needed to independently evaluate SLF s performance. In addition, through our Investment Manager Program (IMP), we alert you of any known issues with the investment managers in the program. Sun Life Financial may be only one of various suppliers you use to deliver a CAP. You will want to define how you evaluate each of your suppliers independently.

22 SECTION How often do you review the investment options in the CAP? Annually Quarterly Semi-annually Monthly What action do you take if there is unsatisfactory performance by an investment manager? When deciding on what action to take, did you consider the factors identified in Section 6.3 of the CAP Guidelines? Through our comprehensive Investment Manager Program (IMP), we offer a broad selection of options as well as many of the essential aspects of plan oversight (investment manager selection, monitoring and review, communication and pricing) in addition to detailed fund information via Morningstar Canada to support sponsor fund review. Sun Life Financial supports sponsors' decisions to make changes to investment options by commenting on timelines and ways to discontinue fund participation. In addition, we can work with the sponsor to provide communication for plan members regarding the change in investment options. 3. How do you monitor the quality of the CAP s recordkeeping? Review of complaints? Periodic audits? Annual review and certification? Independent third party review? With third party audits such as the Annual Segregated Fund Annual Report, the CICA Handbook 5900 Audit Report, and ISO 9001:2000 certification, you can feel confident in our recordkeeping effectiveness. We also have developed a Service Standards Report Card available on the Plan Sponsor Services website that monitors our compliance with our stated service standards, which can assist you in monitoring the quality of the CAP recordkeeping.

23 SECTION How often do you review the decision-making tools made available to members to ensure they remain appropriate and that members are using them? Annually Quarterly Semi-annually Monthly 5. How often do you monitor the performance of service providers who give your plan members investment advice *? Annually Semi-annually Quarterly Monthly Never How do you monitor the performance of service providers who give your plan members investment advice*? Do you consider: Criteria used to select advisor? Complaints from plan members? The tools provided by SLF on the Plan Member Services website and in the what? me save? Guide to Saving and Investing are designed to work for a broad range of investors, regardless of their level of investment sophistication and expertise. We can also customize an overall education approach for plan sponsors. To analyze plan members usage of the tools and other information available online, sponsors can access usage statistic reports available on the Plan Sponsor Services website. Early in 2006, we will launch new and improved decision-making tools. Sun Life Financial provides access to optional investment and financial planning advice programs. We periodically review our advice programs to determine the level of interest by plan sponsors and their members, and monitor feedback from plan members. Your GRS representative will discuss the level of service during their regular update meetings, as necessary. We fully investigate and address any issues with our program as reported through these mediums. * te: The CAP Guidelines do not require sponsors to monitor the quality of advice provided to individual plan members.

24 Terminating a CAP SECTION If your CAP is being terminated, are you providing the following information to plan members? The options available to each plan member? Any action(s) required to exercise these options? Any deadlines for these actions? The manner in which assets will be liquidated or distributed? Any default option if they fail to exercise their options? The impact termination of the plan will have on each investment option (e.g. tax consequences, market value adjustments, early withdrawal penalties, fees, etc.)? SLF follows a defined and structured process, in accordance with relevant legislation, for communicating the required information upon termination of a plan. SLF provides terminating plan members with a complete package of information regarding their options. 2. If a CAP member leaves the plan (e.g. termination of employment, retirement, death), are you providing information about: The options available? Any action(s) required to exercise these options? Any deadlines for these actions? Any default option if they fail to exercise their options? The impact that termination of plan membership will have on each investment option (e.g. tax consequences, market value adjustments, early withdrawal penalties, fees, etc.)? SLF follows a defined and structured process, in accordance with relevant legislation, for communicating the required information when a member leaves the plan. SLF provides terminating plan members with a complete package of information regarding their options. te: In the event that a CAP member dies and ceases to participate in the plan, this information should be provided to the member s designated beneficiary or personal representative. Previous

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