New government “hide and seek” rule tells workers to hunt for retirement information on websites

New government “hide and seek” rule tells workers to hunt for retirement information on websites


In the midst of an economic collapse and at a time of heightened financial insecurity, the U.S. Department of Labor has issued a regulation that tells workers and retirees that to find information about their retirement rights they will have to hunt for it on a website.

No longer will people automatically receive yearly statements about the pension benefits they have earned or quarterly statements telling them how much money they have in their 401(k) accounts.

Instead, they will be told by text or e-mail that they can find these and their other retirement plan documents on a website.

Surveys show that 27 percent of U.S. adults do not have broadband internet in their homes. Applied to Census data, that would be 69 million people. Those who participate in company and union retirement plans are being told that if they don’t have home computers and printers they can use a smartphone to find out what their pension benefits will be, check their 401(k) account balances, and read about their plan’s rules, finances, investment policies, and funded status – or they can go to a friend’s house or use an insecure public computer at a library.

“This is absolutely outrageous,” says Pension Rights Center Executive Vice President Karen Friedman. “At a time when people most need information to protect themselves, the Labor Department has issued a rule that ignores their interests and solely reflects the point of view of financial institutions, employers and service providers.

“Rather than help workers and retirees improve their access to information during a public health and economic crisis, the Department is shifting the responsibility for disclosure away from employers and plan administrators and placing all the burdens to find, print and store information on the backs of participants.”

Called a “notice and access” rule, the new regulation will effectively replace the common sense regulation now in place. Currently, employees must receive information about their retirement plans on paper through the mail unless they regularly use a computer at work or have asked to go ‘paperless.’”

Friedman says the current regulation “protects consumers by ensuring that they actually receive these critical documents, can read them and, most important, save them for future reference.”

She notes that “although plans can theoretically still use the current rule, as a practical matter few will. The reality is that the new “notice and access” rule will upend longstanding practice. It will ask workers and retirees to play a cruel game of hide and seek to get the information that they will need to plan for retirement and to protect and obtain their pensions and 401(k) money.

The new rule gives short shrift to the many surveys that have found that consumers prefer to receive financial information on paper, and the overwhelming evidence that “notice and access” provisions in other areas, such as proxy voting, result in steep drops in the percentage of people who see the information that they were supposed to receive.

The rule’s one concession to the reality of the digital divide laid bare by the COVID-19 crisis is to require plans to send or give individuals a one-time paper notice that will provide instructions on what they will have to do to continue having their retirement plan documents sent on paper by mail.

Will those who need paper delivery act? The proponents of the rule are confident that inertia will ensure that they won’t. If they are right, this will mean fewer challenges to 401(k) fees, less scrutiny of pension investment practices, and less awareness about benefit cutbacks and other plan changes.

But most troubling, Friedman added, “It will mean that in the future few retirees will have the paper statements and booklets they will need to document their rights to benefits. This misguided rule will be disastrous for workers and retirees now and for decades to come.”

Contact Name: Karen Friedman

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