The 21st Century is nearly two decades old — so why are we still relying on 17th Century technology for critical participant communications?
A generation ago, plan sponsors only had to worry about the annual delivery of a Summary Plan Description. Much has changed since then, but not the mandated delivery of an expanding array of paper participant disclosures of various sizes, frequencies and complexity — all of which overwhelm the mailboxes of participants (assuming the “snail mail” addresses on file are up to date).
In an era where nearly everyone carries the Internet with them on their smartphone and can (and increasingly do) tap into their retirement accounts online and via special apps, the notion that a delivery separate in time and space is more effective is laughable. What could be more timely and convenient than notifying a participant of a looming blackout period, or a notice about rollover options, on the same device that allows them to immediately take action, or to schedule an opportunity to review their options?
It’s not as though traditional mail is convenient. In addition to the costs of preparation and printing, there is the cost in postage and the delays inherent in relying on the “swift completion of their appointed rounds” by couriers who must contend with snow, rain, heat and “gloom of night.” This, of course, assumes that the address on file is current, that the materials are produced in a language and font size that the recipient can read, and that he or she actually takes the time to open and peruse the materials.
The sad reality is that with traditional mailings, we have no earthly idea what happens with these thousands of pages of disclosures, forced to rely on a “if you print it, they will read it” assumption that defies common sense.
Congress has taken note. Late last year, bipartisan legislation that would allow for electronic delivery of pension and retirement plan information was introduced in the U.S. House of Representatives by Reps. Jared Polis (D-CO) and Phil Roe (R-TN), along with 26 cosponsors. The “Receiving Electronic Statements to Improve Retiree Earnings (RETIRE) Act” (H.R. 4610) would permit retirement plan sponsors to automatically enroll participants in electronic delivery for plan communications, while providing an opt-out option for employees who still prefer to receive paper documents.
Don’t think that the federal government hasn’t figured this out, at least when Uncle Sam is footing the bill. The Social Security Administration delivers its beneficiary statements electronically, and the federal Thrift Savings Plan uses paperless delivery by default for its quarterly statements unless an individual requests mail delivery. That’s the same approach that the Office of Personnel Management — the federal government’s HR department — takes for the delivery of health benefits brochures.
Some might remind us that today individuals can request this information electronically in some cases. However, the default is hardcopy — and as we know from a generation of plan enrollment experience, participants, even those who are aware of the option, aren’t typically inclined to act, even on their own behalf. Instead, the paper just keeps on coming.
For disclosures to be effective, they need to be available in a medium that is convenient for the recipient to access the information, act on it when applicable and, where desired, file it. Electronic delivery offers all of that. And it costs millions less, is far less damaging to the environment, and even provides the ability to know that the information has been delivered and accessed. With concerns about identity theft looming large, it’s also a far more secure medium of transmitting sensitive personal information than leaving it in an unsecured mailbox or on someone’s front stoop.
It is ironic that in an industry so focused on reducing plan costs and making an efficient use of technology to enhance and improve the participant experience, plans are forced to spend millions — perhaps billions — of dollars every year to produce, print and distribute these massive amounts of paper.
It’s time we quit papering over the problem.Brian H. Graff, Esq., APM, is the CEO of the American Retirement Association.