Short Answer:
Canadian businesses should periodically review their retirement provider to ensure the plan still aligns with workforce needs, fees, services, investment options, technology, education, and governance expectations. A review does not automatically mean the provider needs to be changed.
Why Should Employers Review Their Retirement Provider?
Workplace retirement plans can remain in place for many years, while a business and its workforce continue to evolve.
Employee demographics, technology, fees, investment options, available services, and organizational objectives can all change over time. For this reason, employers should generally view their retirement provider relationship as something that requires periodic review rather than a one-time decision.
The Canadian Association of Pension Supervisory Authorities (CAPSA) recommends that sponsors of capital accumulation plans periodically review the performance of their service providers.
Importantly, reviewing a retirement provider does not automatically mean that changing providers is necessary. A review may instead identify opportunities to improve communication, clarify responsibilities, review fees, update investment options, strengthen employee education, or improve governance processes.
When Should You Review Your Retirement Provider?
Several developments may indicate that it is time for a more detailed review.
Your Business Has Changed
Significant growth, restructuring, new locations, or changes in workforce demographics may mean that the existing retirement arrangement should be reassessed.
Employees Have Recurring Questions
Repeated employee questions about how the retirement plan works may indicate gaps in education, communication, or member support.
Fees and Services Have Not Been Reviewed
Employers may want to periodically assess whether fees remain reasonable and competitive in relation to the services, investment options, education, administration, and support being provided.
Service Issues Keep Occurring
Recurring administrative delays, reporting issues, unresolved service concerns, or inconsistent support may warrant closer examination.
Technology Needs Have Changed
Employers should consider whether portals, digital tools, communication channels, reporting capabilities, and accessibility features continue to meet the needs of the organization and its workforce.
How to Review Your Retirement Provider in Canada?
A structured retirement provider review can consider several areas rather than focusing on a single issue.
Plan Purpose and Responsibilities
Does the current arrangement still reflect the documented purpose and objectives of the workplace retirement plan?
Employers should also understand which responsibilities belong to the provider and which remain with the plan sponsor.
Service Quality
Consider responsiveness, reporting, issue resolution, employee support, and whether agreed services are being delivered consistently.
Fees and Services
Fees should generally be considered together with the services employees and employers receive.
A lower fee alone does not necessarily establish that another provider would be more appropriate.
Investment Options
Investment options and default options should be periodically reviewed using appropriate criteria.
CAPSA recommends periodically reviewing investment options and funds and states that this review should occur at least annually.
Employee Education
Employee education should extend beyond initial enrolment.
Employers may consider whether employees continue to receive clear information about contributions, fees, investments, available tools, plan changes, and where to obtain assistance.
Administration, Technology and Security
Employers may also review recordkeeping, contribution processes, reporting, technology, privacy, cybersecurity, business continuity, and controls protecting member information.
Should Fees Be the Main Reason to Change Retirement Providers?
Not necessarily.
Price is important, but a retirement provider should generally not be evaluated on fees alone.
Employers may consider the overall arrangement, including:
- total fees and expenses;
- investment-management arrangements;
- administration and recordkeeping;
- employee education and support;
- digital tools;
- reporting;
- governance support; and
- additional or optional charges.
This provides a broader picture of the value and services associated with the retirement plan.
When Might Changing a Retirement Provider Make Sense?
A provider change may be considered when a documented review identifies material gaps that cannot be satisfactorily resolved within the existing arrangement.
Examples could include recurring unresolved service problems, unavailable required services, inadequate technology or administration, reporting or governance requirements that cannot be supported, or changes in plan objectives that the current arrangement cannot reasonably accommodate.
However, these circumstances do not automatically require a provider change.
Employers should consider their own plan circumstances and compare available alternatives using documented criteria.
What Should Employers Avoid?
Changing a retirement provider based on one isolated factor may not provide a complete picture.
For example, a decision generally should not be based solely on one employee complaint, one service incident, one period of investment performance, one lower-fee proposal, a promotional claim, or a new technology feature.
A more comprehensive review can help employers evaluate multiple factors before making a decision.
What Should You Consider Before Changing Providers?
Changing retirement providers may involve much more than signing a new agreement.
Depending on the retirement arrangement, employers may need to consider existing contracts, termination provisions, plan documents, account or asset transfers, investment changes, payroll processes, employee records, privacy, cybersecurity, fees, communication, and applicable legal or regulatory requirements.
Communicate Changes Clearly
Employees should generally receive clear information about material changes affecting their retirement plan.
Communication may need to explain:
- what is changing and what is staying the same;
- when the change takes effect;
- whether investment options or fees will change;
- whether employees need to take action;
- how existing balances will be handled; and
- where employees can obtain assistance.
How Can Open Access Limited Support Employers?
For Canadian employers considering their workplace retirement options, Open Access Limited provides customizable group retirement plans and plan-specific resources.
Where an employer is considering Open Access Limited as a potential new provider, Open Access may support areas within its services, including:
- discussing group retirement objectives;
- developing an appropriate plan structure;
- explaining available plan features and investment options;
- providing applicable fee information;
- establishing enrolment materials;
- coordinating employee education and communication; and
- supporting implementation of the Open Access arrangement.
Employers remain responsible for evaluating existing obligations, comparing available alternatives, documenting their decisions, and obtaining appropriate professional advice where required.
The Bottom Line
A retirement provider review does not necessarily mean it is time to switch providers.
Instead, periodic review can help Canadian employers determine whether their workplace retirement arrangement continues to align with plan objectives, workforce needs, fees, services, technology, education, investment options, and governance expectations.
A structured review can also help employers identify areas that may be improved within the existing arrangement before deciding whether a provider change should be considered.
References
- Canadian Association of Pension Supervisory Authorities (CAPSA) (2024). Guideline No. 3: Guideline for Capital Accumulation Plans.
- Canadian Association of Pension Supervisory Authorities (CAPSA) (2024). Guideline No. 10: Guideline for Risk Management for Plan Administrators.
- Open Access Limited. Group Retirement Plans in Canada.
- Open Access Limited. Current Group Retirement Plan Enrolment and Member Resources.