Is your retirement plan stuck in the dark ages?

A common misconception about the so-called “Dark Ages” is that it was a time of ignorance or decline. However, the term is now understood to reflect the scarcity of written records, making the period more obscure for later historians. In reality, the fall of Rome was gradual, and people continued to live, work, and innovate, unaware that history would later label their era as “dark”. The issue wasn’t a lack of advancement, but a lack of documentation.

Similarly, many pension plan administrators and Capital Accumulation Plan (CAP) sponsors may unknowingly be operating in their own dark age. Governance activities may be happening, but without formal documentation, there’s no clear record of how fiduciary duties are being met or decisions are being made. And just like historians forced to rely on fragments and ruins, future committee members, regulators, and other stakeholders may be left piecing together past decisions and governance practices.

Written documentation serves historians by shedding light on the past. In the world of retirement plan governance, documentation also plays an essential role. Pension and retirement plans are built to last for decades, but the people managing them inevitably change. Documentation supports transparency, ensures continuity through turnover and transitions, and preserves the institutional memory that informs future decisions.

Evolving standards and regulatory environment

Governance expectations have continued to evolve, with several new regulatory releases issued in 2024. Take the latest CAPSA Guideline #10 on risk management as an example. The guideline advises plan administrators to document a risk management framework to identify, evaluate, manage, and monitor material risks. Many plan administrators are already considering risk management as part of their routine governance, but how many have formalized it into a comprehensive risk register?

Pension regulators have emphasized the importance of governance and documentation. The guideline notes that regulators may review a plan’s risk management framework when assessing whether administrators are meeting their fiduciary duty and standard of care. Refreshed guidance from the Financial Services Regulatory Authority of Ontario (FSRA) on Pension Plan Administrator Roles and Responsibilities highlights the regulator’s focus on policies and documented decision making, and continues to acknowledge the key practice of having a written governance framework, warning that “failure to have and follow a governance framework exposes the administrator to potential sanction and liability for having breached its fiduciary duty and standard of care.”

Importantly, these elevated governance standards extend beyond pension plans. Under the newly revised CAP Guidelines, CAP sponsors (including those offering Group RRSPs or DPSPs) are now advised to establish and document a governance framework.

In 2024, FSRA announced a revamped plan examination process with “increased emphasis on industry accepted guidelines – largely driven from CAPSA.” Plan administrators selected for a review will be asked to complete a Preliminary Examination Tool, which includes (among other things) the following questions:

• Has a written governance framework/policy been established and documented?
• Has the plan established and documented a policies and procedures manual for overall administration?
• Are all pension administration processes documented to ensure compliance with legislative requirements and plan documents & policies?
• Has the administrator documented a process to monitor and manage risks periodically?
• Does the plan administrator have a documented process to select delegates?
• Has the Administrator documented the reasons for selection for the default option? (DC Plans)
• Is there a documented process to monitor the performance of all investment options on a regular basis? (DC Plans)
• Is there a documented process to review the suitability of all investment options at least annually? (DC Plans)

These latest releases continue a trend toward stronger governance expectations, following earlier updates such as CAPSA Guideline #4 on governance and legislation in some jurisdictions requiring written governance policies. CAPSA’s Guideline #6 on prudent investment practices also calls out the importance of documentation, noting a key element of meeting the Prudent Person Rule is exercising due diligence including documenting final decisions along with the reasons for the decision and circumstances that were considered.

From darkness to documentation

The comparison isn’t meant to suggest today’s pension boards and committees are unsophisticated. Just as early medieval societies remained productive despite leaving behind limited written records, many plan administrators are actively engaged in thoughtful governance today. They may be carefully selecting fund managers, managing risk, and monitoring service providers. But without documentation, those efforts may be invisible to future committees, regulators, or other stakeholders.

History relies on two main sources: written records and archaeology. Without the former, we’re left sifting through ruins, trying to piece together what happened. Pension governance is no different. If current practices aren't clearly documented, future committees may find themselves digging through scattered emails and incomplete notes, reconstructing the past like archaeologists, rather than building confidently on a clear foundation.

To prevent this, plan administrators must shine a light on their processes by committing them to writing. In an era of elevated expectations, documentation isn’t just good practice, it’s essential for demonstrating fiduciary care, preserving institutional knowledge, and ensuring your plan doesn't become a governance ruin for someone else to excavate.

Michael Scott is a Senior Consultant at HUB Investment Consulting. He has been in the pension and investment consulting industry for over a decade, providing expertise on governance and investment oversight to DC and DB pension plans, Capital Accumulation Plan sponsors, and other institutional investors.