Top considerations for Canadian defined contributions plans in 2026
Success for DC plan sponsors in 2026 and beyond will come from striking a balance between innovation and strong governance.
Over the last year the speed of change has accelerated at a dizzying pace. The emergence of AI is creating new opportunities, while also raising many questions about what the future will look like. We believe that for many plan sponsors, the focus of 2025 was about establishing robust governance frameworks after the Canadian Association of Pension Supervisory (CAPSA) updated Guideline No. 3 – Guideline for Capital Accumulation Plans (“CAP Guidelines”). In 2026, plan sponsors will need to strike a balance between innovation and prudent governance ensuring they take the time to thoughtfully and deliberately adjust their benefit roadmaps.
With Canadian workers cutting back on discretionary spending and reducing savings due to ongoing high inflation, financial benefits play a larger role helping employers attract and retain top talent.
This year, we invite you to consider a Quick Hit, Strategic Focus, and Education Opportunity across three main DC areas: Investments, Participant Experience & Plan Administration and Governance.
Investments
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Quick Hit
Plan Fee Review
Plan fees can significantly impact the long-term growth and value of DC plans for participants. The recordkeeper market is competitive, with emerging providers battling with large insurance companies for market share. As plan assets accumulate and the competitive landscape of recordkeepers shifts, plan sponsors should proactively manage and scrutinize fees to ensure they remain reasonable and aligned with market rates.
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Strategic Focus
Revisiting Investment Beliefs and Default Options
With the workforce spanning up to five generations, there is a wide range of financial literacy levels and investment objectives among employees. In addition, market uncertainty and evolving investment product offerings like target date funds, make it important for plan sponsors to ensure investment beliefs are aligned with the needs of employees.
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Education Opportunity
Alternative Investments
With alternative investments becoming a more common component within target date funds, it is an essential part of a plan sponsor’s fiduciary responsibility to gain a thorough understanding of this asset class, including its potential benefits and challenges.
The Employee Experience & Plan Administration
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Quick Hit
Employee Touchpoints – Communication
It’s crucial for plan sponsors to regularly evaluate the entire plan experience from the perspective of their employees, paying close attention to often-overlooked components like digital interfaces and routine communications, especially as recordkeepers start to look at integrating new technologies like AI and “nudges.”
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Strategic Focus
Making sure the plan is competitive
Many DC plans were established decades ago, but the market landscape has evolved. Plan designs need to keep up to attract and retain talent and ensure that employees are empowered to make the most of the retirement benefits provided to them.
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Education Opportunity
Understanding Employee Engagement
For a DC plan to be truly effective, it’s crucial that members are engaged and actively utilize its features and benefits. The CAP Guidelines emphasize the need to establish an employee education strategy, and to review the strategy on an ongoing basis.
Governance
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Quick Hit
Reviewing ESG factors
Investment managers commonly integrate environmental, social and governance (ESG) considerations in their investment process. While these investment managers do not have specific ESG investment mandates, ESG integration has become more mainstream in asset management. In addition, some regulatory bodies, including CAPSA, recognize that ESG factors can be material to long-term investment performance. Incorporating ESG analysis helps identify risks and opportunities that may not be apparent through traditional financial metrics alone.
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Strategic Focus
Delegation in Support of Strategic Priorities
Employers are increasingly looking for ways to “do more with less” due to rising costs and constrained human resources required for robust oversight, making delegation a critical strategy for achieving strategic priorities and improving plan outcomes.
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Education Opportunity
Understanding CAPSA Guideline No.10
With the release of the updated CAP Guidelines in the fall of 2024, CAPSA published Guideline No. 10 – Risk Management Guideline for Plan Administrators. Regulators are formalizing the need for risk management frameworks for registered pension plans.
Success for DC plan sponsors in 2026 and beyond will come from striking a balance between innovation and strong governance. The goal is to ensure that DC plans provide better support to help employees achieve their financial goals, while also advancing broader business objectives.
Communicating program goals to service providers is essential. Meanwhile, consider whether there are opportunities to improve day-to-day employee interactions. Expand governance practices to incorporate emerging risks and look into opportunities for delegation to maximize resources.
With these priorities in mind, we would ask: Which Quick Hits, Strategic Focus areas, and Education Opportunities are on your agenda for 2026?
