DOL Urged to Allow Broader Use of Electronic Disclosures

A coalition of retirement plan trade associations is urging the U.S. Department of Labor (DOL) to permit broader use of electronic communications to deliver disclosures under the 408(b)(2) regulations. 

The coalition, which includes 15 trade associations, as well as employers and retirement services firms, submitted a letter on Tuesday to the DOL’s Employee Benefits Security Administration (EBSA), encouraging the use of modern electronic forms of communication. “Electronic communication today is no longer the exception, it is the norm,” the coalition wrote in its letter. 

The coalition is responding to the DOL’s recently released interim guidance on the use of electronic media, known as Technical Release 2011-03R (see “EBSA Revises Electronic Fee Disclosure Rules”).  A survey conducted by The SPARK Institute found that the interim guidance does not provide meaningful incentives or make it more feasible for plan sponsors and their service providers to use electronic media instead of paper for the required disclosures.

“We are concerned that the guidance in the Technical Release provides little relief beyond that already available through EBSA’s current safe harbor, particularly as it relates to affirmative consent and dependence on paper as the default method of delivery,” said Larry H. Goldbrum, general counsel of The SPARK Institute, a coalition member.  “Based on responses to the survey and discussions with other coalition members, it is clear that a substantial majority of service providers do not intend to make use of the Technical Release policy and the required disclosures will be delivered in paper form, rather than electronically,” Goldbrum said. 

Among the concerns about the interim guidance identified in the survey are the inability of existing systems to support the DOL’s interim e-delivery approach without costly changes; the required affirmative action on a per participant basis for plans to use electronic communications; and the administrative impracticality of the required implementation and monitoring.

Coalition members continue to believe that the prior guidance developed by the DOL in December 2006, in the form of Field Assistance Bulletin 2006-03 (see "EBSA Issues Notice on Benefits Statements and Diversification Notices"), is a viable approach to encouraging and fostering electronic disclosure by employee benefit plans, while providing important safeguards for ensuring that participants who still want to receive required disclosures in paper format can do so.

“Research shows that participants of all ages and incomes increasingly prefer to access information online and we believe that doing so makes it easier for participants to act on the information,” said David Abbey, senior counsel-pension regulation, of the Investment Company Institute.

“There is broad movement toward electronic delivery of information.  For example, IRS makes tax forms available online now instead of mailing them.  The DOL should join IRS and many other federal agencies embracing e-delivery for the benefit of investors and customers,” said ASPPA Executive Director and CEO Brian H. Graff.  “Making e-delivery more available can also help to keep the costs of retirement plans down by cutting down on paper statements that have to be prepared and mailed,” he added.

Coalition members include the American Bankers Association, American Benefits Council, American Council of Life Insurers, American Society of Pension Professionals & Actuaries (ASPPA), Financial Executives International Committee on Benefits Finance, Financial Services Institute, Financial Services Roundtable, Insured Retirement Institute, Investment Company Institute, Plan Sponsor Council of America, Securities Industry and Financial Markets Association, Small Business Council of America, The ERISA Industry Committee, The SPARK Institute and the U.S. Chamber of Commerce.