Building a CAP governance framework that stands up to scrutiny

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From risk management to member education, CAPSA’s revised guidelines call for documented processes and regular review − with Desjardins Insurance offering tools to help sponsors meet the new standard

Louis-Georges Mongeau − lawyer, senior advisor, advice and governance, group benefits and retirement savings at Desjardins Insurance − often sets plan sponsors a simple test: if a regulator walked in tomorrow, could you answer all their questions about your plan’s governance, member support, and provider oversight? For those who hesitate, he says, the priority is to start building a framework now, even if it is modest at first. That urgency underpins the Canadian Association of Pension Supervisory Authorities’ (CAPSA) 2024 update to Guideline No. 3 on capital accumulation plans (CAPs). It is the first major revision in two decades, reflecting an industry that now manages larger plan assets, offers more varied investment options, and faces a wider range of operational and compliance risks than it did in 2004. The updates are principles-based, but they also set out clearer expectations for plan sponsors. They cover three central areas: establishing and maintaining a governance framework, strengthening member education, and ensuring robust oversight of service providers. For Mongeau, the changes are both timely and manageable − provided sponsors understand what is expected and have the right tools in place. “The guidelines have not reinvented the wheel,” he says. “They were updated to reflect where the industry is today and to answer questions plan sponsors have been asking for years.”

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“The guidelines have not reinvented the wheel. They were updated to reflect where the industry is today and to answer questions plan sponsors have been asking for years”

Louis-Georges Mongeau, Desjardins

Governance and risk management: creating a clear framework The most notable change is the requirement that all CAP sponsors − regardless of plan size − develop a documented governance framework. Previously, only certain plans in specific provinces had formal governance obligations. The updated guidelines extend the expectation to all types of CAPs, including group registered retirement savings plans (RRSP) and deferred profit-sharing plans (DPSP).

“When markets dropped sharply at the start of the pandemic, sponsors and members were uneasy. Without a plan, it’s easy to make reactive moves, changing fund lineups, encouraging members to switch investments, at exactly the wrong time”

Published September 30, 2025

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Directories

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Privacy

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External contributors

Authors

Terms & Conditions

People

Companies

About

Directories

Resources

Investments

Pensions

Benefits

News

RSS

Sitemap

Privacy

About us

External contributors

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People

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Clear roles, responsibilities, and obligations for all stakeholders A communication process that includes procedures for handling member complaints A code of conduct, supported by a policy for managing conflicts of interest A risk management framework addressing both financial and operational risks Performance criteria for service providers, including investment managers, with regular evaluations A process for reviewing governance regularly to ensure it stays relevant

Six markers for stronger governance

Mongeau says this is where smaller employers often misunderstand their obligations. “The guidelines are meant to be adapted to the size and reality of each plan, but they cannot be ignored,” he explains. For a small plan, governance might involve a single annual review, while a larger, more complex plan will require more frequent oversight and formalized processes. Risk management is now an explicit part of governance. The framework should address how the sponsor identifies, evaluates, and responds to risks that could affect the plan or its members. This includes financial risks, such as investment underperformance, as well as operational risks like cybersecurity incidents.

Desjardins Insurance’s guide includes, among other things:

A governance policy template A webinar to watch on demand An offer of personalized support

Member education: supporting informed financial decisions The second key area is member engagement and education. In the original 2004 guidelines, members’ responsibilities were limited: read plan documents, use available tools, and seek advice if needed. The updated version expands this list substantially. The updated version also covers newer vehicles such as the tax-free savings account (TFSA), the first home savings account (FHSA), and decumulation products like the registered retirement income fund (RRIF) and life income fund (LIF). The intent is not to surprise sponsors but to recognize how the market has shifted. Members are now expected, among other things, to join their plan promptly, understand its features, be aware of the risks associated with their investment choices, and take an active role in managing their accounts. The expanded responsibilities mean sponsors must be proactive in providing clear, accessible information to help members make decisions that align with their retirement goals. “It’s not just about making materials available,” Mongeau says. “It’s important plan members understand them well enough to take action.” Mongeau explains that Desjardins Insurance has long supported sponsors in this area through its governance and investment committees. “If we find that certain funds are no longer being used, we ask whether they should be removed or replaced,” he says. “We also assess whether new options should be added and whether agreements with investment managers need to be updated.” At one time, many plans defaulted members into money market funds, an approach that today would be considered outdated. Mongeau notes that, to support sponsors, Desjardins Insurance provides detailed performance reports, compliance certifications from managers, and recommendations for when lineups should be adjusted. “This work is already part of our process, and it will be reinforced further under the new CAP guidelines.” Provider oversight: reviewing service providers and investment options Selecting a provider is no longer considered sufficient. Sponsors are expected to review provider performance against agreed criteria on an ongoing basis. This includes assessing the clarity and comprehensiveness of communications, ensuring transactions are processed accurately and within agreed timeframes, and confirming that fees are transparent and reasonable. The same approach applies to investment options: sponsors should regularly evaluate whether funds remain appropriate for members and whether managers are meeting their mandates. Over the past 25 years, the investment menus offered to members have changed dramatically, to now include the growth of target date funds, responsible investment products, and alternative assets such as real estate funds. This makes regular oversight more important than ever.

Why governance matters It can be tempting to see governance as an administrative requirement, but Mongeau says the value becomes clear in times of uncertainty. He points to the market volatility of March 2020 as a stress test: “When markets dropped sharply at the start of the pandemic, sponsors and members were uneasy. Without a plan, it’s easy to make reactive moves, changing fund lineups, encouraging members to switch investments, at exactly the wrong time.” Governance also addresses emerging risks that weren’t on the radar two decades ago, such as cybersecurity. CAPSA’s new Guideline No. 10 on risk management complements the CAP guidelines, urging sponsors to be ready for incidents ranging from data breaches to operational disruptions. “If you don’t know what to do when a cyber incident happens, confusion might take over,” Mongeau warns.

Emerging investment options are another area where governance plays a role. The investment menus of 2004 looked very different from today’s. Target date funds, responsible investing options, and more complex strategies like real estate funds have become common. Each new product brings its own risks and oversight needs, making a structured review process even more important. Tools to help sponsors get started Recognizing that many organizations, especially small to medium-sized businesses (SMBs), are starting from scratch, Desjardins Insurance developed a governance policy template alongside a plain-language guide explaining the updated guidelines. The template walks sponsors through the roles and responsibilities of all stakeholders, documentation requirements, review schedules, and examples of risks to consider. “It’s meant to be a living document,” says Mongeau. “You don’t create it once and put it on a shelf. You review it regularly, because new risks will keep appearing.” He points to artificial intelligence as one that may become more concrete in the near future. Today it may be a tool for member education or administration, but tomorrow it could introduce new types of operational or data risks.

Desjardins Insurance also offers ongoing support by monitoring service providers. This includes performance reviews for investment funds and managers, compliance reporting, and recommendations when certain funds are no longer serving members’ needs. Over his career, Mongeau has seen default options shift from money market funds to target date funds, the introduction of responsible investment choices, and the gradual addition of alternative asset classes. Each change has required sponsors to reassess how their plan is structured. A question every sponsor should ask The guidelines are designed to scale with the size of the plan, but they still require documented processes and periodic reviews. This is particularly important given that regulators have begun conducting audits. A lack of preparation not only risks non-compliance but can also undermine members’ confidence in the link plan. The updated CAPSA guidelines are grounded in principles rather than rigid rules, which gives sponsors flexibility. But flexibility is not the same as inaction. “There’s no one-size-fits-all approach,” Mongeau says. “You adapt it to your reality, but you still need something in place.” For small and medium-sized businesses that may not have in-house expertise, leaning on tools, templates, and service provider support can make the process far less challenging. For larger plans, the challenge may be integrating governance updates into existing processes and ensuring that member communication keeps pace with expanded responsibilities. Either way, the message is clear: governance is now a standing item on the CAP sponsor’s agenda. Those who embrace it as more than a compliance requirement will be better positioned to handle market swings, adapt to new risks, and deliver a plan that works for members over the long term.

Louis-Georges Mongeau, Desjardins

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