News & Updates

ACPM’s New “Calls to Action” for Decumulation 2.0

Authors:
Jason
R. Paquette

November 29, 2022


a retired couple looking outside through patio doors while drinking coffee
The Association of Canadian Pension Management (ACPM) has released a new white paper: Decumulation 2.0: Converting Retirement Savings to Lifetime Income – A Prescription to Help Canadians Navigate their Retirement Income Need. Historically, much of the focus for capital accumulation plans (“CAPs”, e.g., defined contribution (DC) pension plans, RRSPs, TFSAs, DPSPs, etc.) has been on providing tools and resources to assist CAP members to build a nest egg during their working years (i.e. the accumulation phase). However, more recently there has been concern that there are not adequate products and services available to individuals to produce optimal outcomes during retirement when they begin to draw down on those savings (i.e. the decumulation phase). 
 
With its new white paper the ACPM builds on the work started with its influential 2017 decumulation white paper, which illuminated the need for significant improvements in the Canadian retirement income system to meet the needs of Canadian CAP members approaching retirement.  The new white paper sets out six new “calls to action” to help secure the financial wellbeing of Canadians whose workplace retirement savings is in CAPs:
 
  1. Create a “Dashboard” providing a clear and complete picture of all individual retirement income sources. The white paper notes that Canadian retirees need a dashboard similar to what exists in Australia, Belgium, Denmark, Israel, The Netherlands, and Sweden where functioning retirement dashboards allow individuals to consolidate and track their various retirement accounts and benefits.  ACPM recommends that a Canadian retirement dashboard be created utilizing individual retirement information available through the Federal government and the Canada Revenue Agency.
  2. Provide regulatory guidance on computer-based retirement income modeling tools for CAP members. ACPM recommends that Canada’s pension regulators provide industry guidance that directs CAP sponsors and providers to make available to their members modelling tools with certain best practice attributes to assist them with managing CAP decumulation.
  3. Provide Canadians access to unbiased advice. ACPM recommends that all jurisdictions in Canada implement legislation that defines regulated areas of practice and titles for professionals working in retirement and financial planning.
  4. Make legislative changes to simplify the decumulation phase and enable effective decumulation solutions. To assist individuals who hold retirement savings in Defined Contribution (DC) pension plans subject to regulations in different jurisdictions, ACPM recommends they at retirement they be permitted to elect a common set of pension standards rules to apply to all their DC pension plan account assets.
  5. Provide regulatory guidance on duties relating to offering decumulation options. ACPM recommends that industry decumulation regulatory guidelines be developed to clarify how CAP plan sponsors and administrators can manage duties associated with offering group decumulation options.
  6. Resuscitate the Pooled Registered Pension Plan (PRPP) as an effective decumulation vehicle. ACPM recommends legislative changes be made to PRPP legislation to eliminate the requirement for employer participation, allow for the possibility of decumulation-only PRPPs, and reduce the administrative burden and costs associated with PRPPs.
You can access the full white paper by clicking on more information below.

 

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