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Is Your CAP Built to Withstand Market Uncertainty?
Is Your CAP Designed for This Market?
Canada’s exposure to the U.S. economy is significant.
Before we dive in, let’s quickly revisit what we mean by a Capital Accumulation Plan (CAP).
A CAP is a retirement savings program designed to help employees build long-term financial security. Contributions are typically made by both employees and employers, and the funds are invested over time.
Examples of a CAP with a retirement savings/income focus may include the following plans or arrangements provided for employees or members: defined contribution pension plan (DCPP) with or without post-employment variable benefits options, registered retirement savings plan (RRSP), deferred profit-sharing plan (DPSP), locked-in retirement account (LIRA), registered retirement income fund (RRIF), life income fund (LIF), PRPP, VRSP, and Tax Free Savings Account (TFSA). Examples of a CAP without a retirement savings/income focus include registered education savings plan (RESP) and First Home Savings Account (FHSA).
In today’s environment of rising trade tensions, geopolitical volatility, and unpredictable markets, plan sponsors face a growing challenge: ensuring that their CAP offers a strong range of asset classes, geographic exposure, and investment styles.
The goal? Helping employees manage risk, reduce volatility, and continue pursuing long-term returns.
What the numbers tell us
Roughly 25% of our Canadian GDP is tied directly to exports across the border. With tariffs and political uncertainty making almost every headline, many are asking: What impact will this have on my investments?
For members in a CAP, the answer depends on how much flexibility their plan allows.
Too often, investment menus are limited. This approach might work in ideal market conditions, but we are currently facing anything but.
In fact, beyond limited investment choices, the default investment option itself may have a geographic makeup and asset mix that is increasing risk for your employees.
At a time when geographic risk matters more than ever, employees need options that reflect today’s realities.
This includes the ability to distinguish and choose between Canadian, U.S., international, and global investment options, as well as access to both passively and actively managed investments.
This a critical strategy for helping to reduce market volatility during these uncertain times.
Is your plan equipped for volatility, or relying on outdated defaults?
Your business and team deserve more than a set-it-and-forget-it solution.
We like to understand what our plan members are truly willing to accept when it comes to investment risk.
While assumptions are often made based on age, this can overlook what really matters:
Does the member understand the risk?
Can they afford volatility right now?
Do they feel confident making changes when the market shifts?
This is where the CAP plan design and employee’s access to financial education intersect.
A big part of a well thought out Capital Accumulation Plan includes:
Regularly reviewing investment options and asset class availability
Evaluating whether plan provisions are still appropriate
Ensuring employees have both the guidance and the confidence to make sound decisions
- Providing meaningful financial education, tools, and access to full financial planning through advisors qualified to deliver comprehensive guidance with the goal of reducing employee stress and anxiety related to their finances.
It’s time to move beyond minimal requirements.
Plan sponsors have the opportunity to deliver smarter, more resilient solutions that reflect both the world we live in and the pressures their people are facing.
CAP Guidelines Set the Standard
CAP Guidelines Set the Standard
But what is your provider doing about it?
We believe the updated guidelines from CAPSA regarding the CAP (Capital Accumulation Plans) Guidelines addresses concerns about ongoing suboptimal plan member outcomes, emphasizing the need for additional advice and services to drive improvement.
In recent years, investment regulators have introduced additional requirements for financial advisors and planners to enhance transparency in areas such as fees and conflict-of-interest disclosures.
Similarly, we believe the 2024 CAP updates aim to standardize practices, ensuring Canadian investors receive consistent, high-quality service regardless of where their investments are held.
The numbers tell the truth
While the 2024 CAP guidelines offer clear steps for plan improvement, it’s essential to understand the real-world challenges plan members face. Financial stress continues to be a dominant concern for Canadians, shaping their well-being and retirement readiness. Plan sponsors are increasingly seeking insights into the financial issues that cause the most stress to identify meaningful solutions for their employees.
Three years in a row, Canadians say money causes them the most stress in life. There is a significant four-point increase in the number of Canadians who say that money causes them the most stress. BIPOC Canadians, those <55 and those earning <50K in annual household income are more likely to say money causes them the most stress. 29% of retired Canadians report that money is their main stressor. ¹
Capital Accumulation Plans play a crucial role in the broader context of compensation, a fact recognized by both plan sponsors and members. The following data sheds light on specific financial stressors, with a particular focus on challenges faced by younger generations.
Historically, less emphasis has been placed on the dual-purpose planning capabilities of CAPs, underscoring the need for plan sponsors to thoroughly review their plans. By doing so, they can ensure their CAPs deliver value across all generational cohorts within their organization.
The root causes of financial stress become clear when we examine the top financial pressures facing Canadians today.
Bill payments, saving for retirement and saving for a major purchase are the top three financial stressors for Canadians.
37% are stressing about bill payments/expenses, roughly a one third are stressed by saving enough for retirement (35%), saving enough for a planned major purchase (31%) and/or by their debt (30%). Roughly two-in-ten stress about job/ income stability (21%), lack of control (15%) and/or investing (15%).²
Why does this matter?
Because despite the updated CAPSA guidelines and growing attention on financial wellness, there’s still a major disconnect between what plans are designed to do and what members actually experience.
We have compliance frameworks.
We have plan structures.
But what we don’t always have is engagement, education, or meaningful outcomes.
Too often, members are not given the right choices or the tools, advice, or context they need.
That’s our mandate at BFS Benefits & Retirement: to ensure everything is working as it should—benefiting both the business and its employees.
Ongoing financial stress, missed retirement goals, and a growing sense of uncertainty—especially among the most vulnerable demographic groups.
Without impactful plan design, proactive support, personalized guidance, and a commitment to long-term financial literacy, the potential of your business and team is left on the table.
If you ready to change that, it’s time to talk to us.