U.S. LABOR DEPARTMENT APPROVES ELECTRONIC DOCUMENT DELIVERY AS DEFAULT OPTION FOR RETIREMENT PLANS

Posted on May 21, 2020

New Regulation Promotes Broader Technology Use to Communicate with Customers

WASHINGTON, D.C. – The U.S. Labor Department today issued a final regulation to permit retirement plans to deliver disclosure documents to plan participants through electronic means as the default option.

The Insured Retirement Institute (IRI), the leading national trade association for the retirement income industry, praised the Labor Department action as a win for plan participants, beneficiaries, retirement plans, and plan sponsors.

“Given society’s widespread use of technology in 2020, this regulation is a victory for common sense,” said Jason Berkowitz, IRI chief legal and regulatory affairs officer. “More importantly, plan participants and beneficiaries of all ages and incomes will gain the ability to access real-time online data, which will enable them to make more informed decisions about their retirement savings. Additionally, the rule maintains important safeguards to ensure participants who still want to receive required communications in paper format can do so.”

Adoption of this Department of Labor rule was among several priorities included in IRI’s 2020 Federal Retirement Security Blueprint, which was announced earlier this year.

IRI noted that at a time when Americans are more responsible than ever for ensuring their own financial security in retirement, the current system of default paper delivery works against the goal of helping Americans make decisions about their retirement planning.

“The density of printed disclosure documents is, for many people, intimidating, and the static nature of printed materials does not invite the kind of interactive engagement people should have to intelligently manage their retirement portfolios,” Berkowitz noted.

The Labor Department rule permits the use of electronic disclosures of retirement plan information as a default choice for plan participants. It also allows plan administrators who satisfy specified conditions to provide participants and beneficiaries with a notice that certain disclosures will be made available on a website.

In its 2018 Executive Order on Strengthening Retirement Security in America, President Trump directed the Labor Department to explore the potential for broader use of electronic delivery as a way to improve the effectiveness of disclosures and to reduce their associated costs and burdens. IRI strongly supported that executive order.

“This is major step forward in modernizing regulations that take advantage of technology without sacrificing important consumer protections,” Berkowitz said. “This regulation allows consumers to choose to paper disclosures if they want but also recognizes that consumers are increasingly comfortable using technology to speed communications and forgo the use of paper. We urge other regulators at both the federal and state level to consider taking a similar approach to modernize their document delivery rules.”

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Contact: Dan Zielinski