MONTREAL, Oct. 14, 2003 – Standard Life made public today its comments on the proposals that the Joint Forum of Financial Industry Regulators made last April regarding employer-sponsored pension plans and Group RRSPs.
“We support this initiative and are happy to be given the chance to work with industry representatives and regulators in order to develop a foundation for the effective regulation of capital accumulation plans (CAPs),” said Claude Garcia, President of the Canadian Operations. Standard Life believes that further improvements can be made especially in terms of clarity, transparency and practicality to the existing guidelines.
“We are concerned that the proposed guidelines are not conceived to make things simpler. That is, there is no harmonization across Canadian jurisdictions, nor is there any coordination within the insurance, pension and securities sectors. The consequences will be over-regulation, confusion and even conflicting regulations for everyone involved. In fact, we see two major problems. The first is that the guidelines’ goals need to be clearer vis a vis investment issues. As they stand, there are three possible interpretations, which lead to different outcomes. The second problem,” continued Mr. Garcia, “is with the content of the statement provided by sponsors.”
To outline the first problem, the brief explained each interpretation, followed by Standard Life’s recommendation to the Joint Forum and the different options available to fix this problem. “We are asking the Joint Forum to endorse the position that the investment provisions of all three regulatory regimes are sufficiently similar that compliance with any one of them is adequate,” stated Mr. Garcia.
The second issue at hand is the content of member statements. Again transparency is key. Standard Life suggests that easy access to information for plan members is crucial. “Although we strongly believe in making our statements clear and easy to follow, we are not ready to make these more costly without any real benefits to the member. As the draft text stands, providers would have to enumerate each transaction made within the year. This means that a member who is paid 26 times a year, invests in 5 different funds and has three sources of contributions would end up with a statement with close to 400 lines. Obviously this is not a practical solution. Rather, we suggest making this level of intricate detail available to any member upon request,” said Mr. Garcia.
Although Standard Life concludes that work remains to be done on the draft text in order to make it more user-friendly for both sponsors and members, it is committed to the process of improving the rules that govern the investment of CAP assets.
Standard Life is a major service provider to the Capital Accumulation Plans (CAP) market in Canada and manages approximately $6 Billion of retirement assets on behalf of over 400,000 CAP members across every jurisdiction. Our services encompass the design, documentation, and maintenance of CAPs as well as educating and communicating with CAP members. In addition, Standard Life invests CAP assets in a variety of financial vehicles.
In Canada, The Standard Life Assurance Company and its affiliates have $30 billion in assets under management and offer a wide range of financial products and services to over one million individuals, including group insurance and pension plan members. Its 2,400 employees are committed to providing superior customer service from its principal office in Montr�al and its 20 sales offices across the country. Products and services include group savings and retirement, group insurance, individual life insurance, savings and retirement, mutual funds and portfolio management services. Total premium income and deposits reached $3.6 billion in 2002. (www.standardlife.ca)
The Standard Life Assurance Company, founded in Edinburgh (Scotland) in 1825, is Europe’s largest mutual life insurance company with over 14,200 employees, $208 billion in assets under management and over five million customers in the United Kingdom, Canada, Ireland, Germany, Austria, Spain, India, China and the United States. The Company has also established a representative office in South Korea. The Company is described as having excellent financial strength by the two most prominent international, independent rating agencies. Its total premium income reached $26.8 billion in 2002. (www.standardlife.com)