CAPSA’s guideline reset shifts DC plans toward outcomes, advice and accountability, says DC experts
One year after the CAPSA guideline revisions came into effect, defined contribution (DC) plan sponsors are taking stock of what’s worked, what hasn’t, and where the next challenges lie.
According to DC plan experts, the updated guidelines, particularly Guideline 3 on governance and member outcomes, have shifted expectations considerably, forcing organizations to rethink their processes and priorities.
Bernadette Chik explained that the third CAPSA guideline had not been updated since 2004, and the revisions largely reflect the changes the DC plan industry has seen over the past two decades. Prior to the 2024 revisions, the CAPSA guidelines were less detailed and did not fully address expanded fiduciary responsibilities. Many plan sponsors lacked formal governance structures, leading to inconsistent approaches.
“There is now an emphasis on good governance to achieve members intended outcomes. And having a written documentation of that governance framework to be put in place to ensure good governance. On a related note, there’s an elevated expectation now on member communication and the plan sponsor is centrally positioned to provide that education,” said Chik, leader of DC advisory business at Mercer.
For Wakeef Hussain, associate director of investments and DC at Eckler, the original CAP guidelines applied broadly to all capital accumulation plans, including DC, Group RSPs, and DPSPs, though in practice, most of the focus was on DC plans due to stricter regulatory requirements.
“Before the 2024 revisions, the guideline was more like a reference manual with broad principles,” he said, noting that that it emphasized accumulation over decumulation or holistic member outcomes, leaving gaps in risk management.
“The old guidelines were less prescriptive, and they didn’t emphasize the sort of expanded fiduciary responsibilities,” added Chick, noting that creating written governance frameworks has been a key focus for plan sponsors moving forward, helping them clarify roles and responsibilities.
Historically, CAP guidelines were effective in areas like fee review and investment oversight, where larger sponsors were already comfortable, according to Hussain. Member education tools had been introduced, but engagement was uneven due to assumptions about financial literacy and a lack of personalization.
Even before the updated guidelines, record keepers had been improving websites, enhancing portability, and providing access to financial advisors, creating a foundation for members, though these tools alone could not address individual circumstances or complex tax strategies.
The revised guidelines have since formalized these tools as part of governance expectations, placing a stronger focus on default funds, education, continuous engagement, and linking retirement planning with broader financial wellness and decumulation strategies.
Plan sponsors are also now expected to integrate advice access, targeted campaigns, and interactive resources as part of their governance practices.
Mike Werbowecki, senior vice president of group retirement at NFP Canada, also acknowledged how the updated CAP guidelines place significant importance on member education, particularly when it comes to supporting individuals understand the purpose of their plan.
Yet, he noted that many employees may not fully grasp their DC plans compared with traditional DB plans. He believes education should clarify that “the group plan may not be enough on its own” while additional government benefits and personal savings are likely needed to replace retirement income.
He also highlighted the importance of using available tools to project retirement needs, so members can assess whether contributions are sufficient and adjust early.
“It’s better to know that at age 35 than it is at age 55 or 60 because the compounding returns will help you get there,” he said.
Additionally, with the updated guidelines, sponsors now have clearer expectations and a stronger regulatory framework. Hussain emphasized that the revisions strike a balance between guidance and flexibility, allowing organizations to tailor policies based on their size, complexity, and resources.
“We feel that sponsors now have clear expectations and a regulatory lens driving best practices. It's really looking to strike the right balance of setting clear expectations without being overly prescriptive. Plan sponsors can tailor the approach based on their size and complexity and resources, which has pushed organizations to centralize governance and formalize policies and think beyond just accumulation, because that was the original focus, and more towards member outcomes and accumulation strategies.”
The revised guidelines also signal a shift toward enabling access to advice while ensuring proper oversight to avoid conflicts of interest, broadening the scope for plan types and improving guidance on governance and member outcomes, added Hussain.
Still, challenges remain, particularly for smaller sponsors who continue to struggle with limited resources and larger plans managing multiple policies, noted Chik and Hussain. Decumulation strategies are still underdeveloped, and adoption is slowed by legislative complexity and provincial inconsistencies, which also create administrative burdens.
Member engagement also continues to be difficult, as the optimal communication methods vary by organization.
Overall improvements, however, have been seen in governance, fee transparency, tools, and education, while overestimating member engagement and underestimating risk management complexity remain persistent issues, according to both experts.
One of the critical points Hussain emphasized is member engagement, suggesting that it requires more than just providing tools. It demands an active leader within the organization to drive awareness and participation, noting “each plan sponsor needs a champion to really be involved and be proactive,” and that smaller organizations can manage this more easily than larger ones.
Whereas for bigger organizations, a structured communication and education roadmap is essential, ideally tailored to employee demographics and using multiple channels, such as short videos, articles, or printed materials, to reach different groups effectively, he said.
He also stressed that plan sponsors can't force participation but can facilitate engagement by promoting available resources regularly and making employees aware of upcoming educational opportunities.
Since the CAP guidelines have been revised, plan sponsors have also learned the value of strategic phasing, implementing changes gradually to avoid overwhelming committees or members. Role clarity and documentation have also been critical, ensuring responsibilities of sponsors, members, record keepers, and third-party providers are clearly defined.
Moving forward, Hussain emphasized that CAP plan sponsors should begin with a gap analysis to identify what is already in place and what needs attention, noting that “you don’t have to build something from scratch if it’s already there,” but argues a roadmap is essential to implement changes effectively.
He stressed the importance of enhanced member education, arguing that tools alone are insufficient and should be complemented with holistic advice solutions to align retirement planning with broader financial goals, effectively “elevating the baseline.”
He also highlighted the need to address decumulation planning, advising plan sponsors to provide guidance and education even if specific products are not offered. Formalizing governance and service provider review policies is another key area, with Hussain noting that existing procurement processes should be reframed through a CAP lens to ensure consistent evaluation and monitoring.
Finally, he stressed embedding risk management into day-to-day governance, including IT and cybersecurity controls, while maintaining a principle-based approach.
“They don't need to implement every best practice immediately,” he said. “The guideline is principle-based so proportionality and phasing are still key.”
