Making it our business to accommodate your needs today and tomorrow

Transcription

1 CAP Guidelines Making it our business to accommodate your needs today and tomorrow

2 Introduction These guidelines reflect the expectation of regulators regarding the management of a Capital Accumulation Plan. They are intended to support the improvement and development of industry practices. Capital Accumulation Plans (CAP): A CAP is a tax assisted investment or savings plan that permits its members to make investment decisions among two or more options offered within the plan. A CAP may be established by an employer, trade union, association or any combination of these entities for the benefit of its employees and members. CAP Sponsors: Employers, trade unions, associations or combinations of these entities that establish CAP s are referred to as CAP Sponsors. Service Providers: Includes any provider of services or advice required by the CAP sponsor in the design, establishment and operation of a CAP. CAP Members: Individuals who have assets in a CAP. These individuals may include active or former employees; trade union or association members; and in certain cases, their spouses or common law partners. Investment Funds: A mutual fund, pooled fund, segregated fund or similar pooled investment product. The Intent of Guidelines: The intent of these guidelines is to outline and clarify the rights and responsibilities of CAP sponsors, service providers and CAP members; and, ensure that CAP members are provided the information and assistance that they need to make investment decisions. These guidelines apply to all Capital Accumulation Plans and supplement any legal requirements applicable to these plans. They do not replace any legislative requirements. CAP sponsors are responsible for meeting any applicable legal requirements, including any requirements that may extend beyond the scope of these guidelines. The CAP Sponsor:

3 When CAP sponsors decide to establish a plan, they assume certain responsibilities in their role as CAP sponsor. They may, however, delegate some responsibilities with 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 with the plan is done in the accordance with the terms of the CAP. Many of the responsibilities of the CAP sponsor relate to the providing of information and documents to CAP members. The information and documentation that the CAP sponsor provide to CAP members should be prepared using plan language, in one or more formats that are easily read and interpreted by members. The CAP sponsor should ensure that decisions about establishing and maintaining the plan along with information about how those decisions are made, are properly documented and that the documents are retained. Service Providers: To the extent that responsibilities of the CAP sponsor are delegated to a service provider, the service provider is responsible for following these guidelines and any applicable legal requirements. Service providers engaged by the CAP sponsor should have the appropriate level of knowledge and skill to perform the tasks delegated and to provide any advice within their area of expertise the CAP sponsor requests. Setting up a CAP

4 The CAP plan sponsor is responsible for clearly defining and documenting why the capital accumulation plan is being established. Purpose of the CAP: The Plan has been developed and implemented to provide a method by which COMPANY can assist the plan members to financially and efficiently prepare and save for retirement. Our CAP s purpose has been communicated to plan members: Through member communications Group and one on one counseling provided by our Consultant, Reuter Benefits. We have established a regular review and communication timetable for our CAP s purpose. Service Provider: The CAP plan sponsor is responsible for establishing criteria for the selection of service providers and for using these criteria to select any service providers it engages. Selection criteria used to select SERVICE PROVIDER NAME as a service provider: Strength and Security of SERVICE PROVIDER Quality, level and continuity of service Cost of Service Support tools provided to members Investment Options provided Administrative capabilities Level and consistency of service Expertise of SERVICE PROVIDER Where the CAP plan sponsor delegates responsibilities to a service provider, the CAP plan sponsor should ensure that the applicable roles and responsibilities of the CAP plan sponsor and service provider are documented. Our Consultant, Reuter Benefits, has documented the roles and responsibilities of each service provider. Investment Options:

5 The CAP plan sponsor is responsible for selecting the investment options made available in the plan. The sponsor must ensure that a range of investments is offered which must meet legislative requirements and support the plan s purpose. When deciding what types of investment options to include in our CAP s investment line up (i.e. investment funds vs. employer securities vs. annuity contracts, etc.) we considered all of the following: The purpose of our CAP The legal limitations on the types of investments offered Fees associated with the investment options Ability to periodically review the options selected The diversity and demographics of our CAP members The liquidity of investment options The degree of diversification among investment options available The level of risk associated with the investment options CAP Members should be allowed, at least quarterly, to transfer among the investment options available in the plan. Plan members have the opportunity to transfer between investment options more frequently than the quarterly minimum required in the CAP guidelines. They can do this by using: SERVICE PROVIDER secure Internet site Calling SERVICE PROVIDER toll free number Sending SERVICE PROVIDER a written request Contacting our Consultant, Reuter Benefits to obtain investment advice from a licensed advisor The CAP plan sponsor should establish a policy that outlines what happens if a plan member does not make an investment choice. We have established a policy to address plan members who fail to make investment choices. We have set up a default investment option to be applied if a member does not make an investment choice. The default investment option for the COMPANY Retirement plan is the NAME OF FUND. The default investment is communicated to members through:

6 Our Consultant, Reuter Benefits Member meetings (group and one on one counseling) Written communications Reuter Benefits contacts plan members who are in the default investment and counsels them on choosing appropriate investments. Maintenance of Records: The CAP plan 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. We have documented the record keeping and document retention policy, which includes: A description of the types of documents to be retained How long various types of documents should be retained Who can access these documents

7 Investment Information & Decision Making Tools The CAP plan sponsor should provide investment information and decision making tools to assist plan members in making investment decisions within the plan. In determining which decision making tools to make available for our plan members, we consider all of the following: The purpose of our plan The types of decisions members must make Costs of the information and decision making tools The diversity of plan and where they are located Members access to computers and the internet Investment Information: We provide plan members with investment information that covers all of the following: How investment funds work Investing in securities (stocks, bonds) The relative expected risk and return for various investments Product guides Performance reports for any investment options offered Glossaries of terms Decision Making Tools: The CAP plan sponsor should provide plan members with decision making tools to help them make informed investment decisions with the plan. We provide plan members with access to all of the following decision making tools: Asset allocation models Retirement planning tools Calculators and projection tools Investor profile tools to help self assess risk tolerance Our consultant, Reuter Benefits, to provide investment advice SERVICE PROVIDER interactive website

8 When we selected Reuter Benefits as our service provider who delivers investment advice to plan members, we considered all of the following: Their professional qualifications/licensing/accreditation Their professional reputation Their experience with pension legislation and related rules The overall corporate stability of their organization Any real or perceived lack of independence/conflict of interest Their ability to deliver a consistent level of service in all regions Any complaints/disciplinary action against them Reuter Benefits delivers investment advice in the following ways: One on One counseling with a licensed representative Group member meetings Access to speak with a licensed representative at any time by calling the toll free number

9 Introducing the Capital Accumulation Plan to CAP Members When an individual becomes eligible to enroll in a CAP, the CAP sponsor should provide plan members with information regarding the purpose of the plan and information outlining their rights and responsibilities under the plan. When employees become eligible to join our CAP, we provide them with all of the following information: The purpose of the CAP Contribution levels Investment options, including how to make and change them Plan member responsibilities and right to access information The policy regarding failure to make investment choices The name and contact information of any service providers How to access additional information related Information about the plan is provided to eligible employees through: Enrolment Kits Employee Communications SERVICE PROVIDER website We have provided plan member with an outline of how they can access additional information related to our CAP and a description of the type of information that is available. We are confident that our plan members understand their rights and responsibilities as members of our CAP. We communicate plan members rights and responsibilities through: Initial enrolment Group member meeting provided by our consultant One on One counseling provided by our consultant Written communication

10 Investment Options: For each fund that is an investment option available in the plan we provide all of the following information to plan members: The name of investment fund The names of all investment management companies The investment objective of the fund The types of investments held in the fund A description of risk associated with the fund Historical Rate of Return We have provided plan members with all of the following information about how to make transfers among investment options: Forms required to effect transfers and where they must be sent Other ways of making transfers (internet, telephone, etc) Any costs for transferring among options Restrictions or limits on transfers Circumstances in which transfer options may be suspended Information about investment funds and how to make changes is communicated to plan members using: Reuter Benefits (one on one counseling, group meetings and access to their licensed representatives via number or ) SERVICE PROVIDER website and number Enrolment kits

11 Ongoing Communication to Members The CAP sponsor should regularly provide CAP members with information on their CAP account and the performance of the investment funds available in the plan. The CAP sponsor should also provide access to additional information upon the request of members. Member Statements: Plan members are provided with a statement of account PERIOD. Plan member statements include: Summary of investments by option type Investment activity Details about each investment fund Summary of transactions How to get specific information on each investment option Changes to Investment Options: The CAP sponsor should provide advance notice to CAP members when there are significant changes in investment options. We ensure plan members are provided with advance notice when there is a significant change to investment options. These changes are communicated to members through: Written communications Access to Reuter Benefits licensed representatives One on One counseling offered by Reuter Benefits We ensure performance reports for investment funds are provided to plan members at least annually. They are available on the SERVICE PROVIDER website for plan members to access.

12 Maintaining a CAP The CAP sponsor should establish criteria for the periodic review of service providers, investment options, records maintenance, and decision making tools provided to members. Reviewing Service Providers and Service Providers who provide investment advice: On an annual basis, we evaluate these service providers against the original criteria we used to select them. Date Service Providers were last reviewed: Reviewing Investment Options: We review the investment options in our CAP at least annually. Date investment options were last reviewed: Reviewing Maintenance of Records: We periodically monitor the quality of our CAP s record keeping annually. Date the quality of plan records was last reviewed: Reviewing Decision Making Tools: To ensure decision making tools remain appropriate and that plan members are using them, we review the tools periodically. Date the plan s decision making tools were last reviewed:

13 Termination The termination of a CAP member s participation in the plan should be done in accordance with the terms of the plan and any applicable legislative requirements. When a member leaves our CAP (i.e. termination of employment, retirement, death) we provide all of the following information to them (or in the case of their death, to their beneficiary) 1. The options available 2. Any actions required to exercise these options 3. Any deadlines for these actions 4. Any default options if they fail to exercise their options 5. The impact that termination of plan membership will have on each investment option (i.e. tax consequences, market value adjustments, early withdrawal penalties, fees, etc)