A group of labor, women’s, minority, and consumer organizations, representing millions of Americans, sent a letter to the Department of Labor (DoL) today, strongly supporting the Department’s current rules regarding how participants receive critical information from their retirement plans. The DoL is under tremendous pressure from companies and the financial services industry to change those rules to make electronic delivery of 401(k) statements the default option for everyone. Opposing the change are the AFL-CIO, Consumers Union, National Consumers League, National Council of La Raza, National Women’s Law Center, Service Employees International Union (SEIU), and the Pension Rights Center, which spearheaded the effort.
The letter urges the DoL to maintain its current rules, whereby electronic delivery is the default option only for those workers whose jobs require them to have a computer. For all other workers, all retirees, and other participants in a company’s 401(k) plan, the default is to receive printed statements; they must affirmatively consent to receive such information electronically.
The letter states
Receiving clear and accessible information about 401(k) fees and investment options is critical if people are to be able to protect and understand their 401(k) benefits. In our view, the Department of Labor has already provided employers and financial institutions with sufficient latitude by allowing them to automatically provide information electronically to those people who work with their employer’s computer network as an integral part of their day job. This is a compromise we support. But where employees do not use a computer in their everyday work, it must be up to them to decide – not financial institutions or their employers – whether they should get this critical information by mail or electronically.
While there are costs to paper copies, there are greater costs when participants and beneficiaries miss significant information about their 401(k) plans – which are the predominant retirement savings vehicle for millions of Americans.
In an accompanying memorandum, the groups note
The reality is that computer access and usage in the United States is very much a function of age, occupation, education and income. The 2009 Current Population Survey (CPS) reports that 27 million workers over the age of 15 report no access to the Internet, either at home or at another location. Recent studies have shown that the most vulnerable populations are the least likely to have computers at home or access to the Internet at home or at work.
“The financial services industry argues for electronic delivery as a cost-saving measure. Our concern is for the millions of workers who might miss out on key information about their fees and benefits, because they don’t have easy access to a computer, because they are not computer literate, or because they are simply wary about getting such confidential information online,” said Karen Friedman, executive vice president and policy director at the Pension Rights Center. “We are talking about protecting people such as factory workers, older Americans, people of color, and lower-income workers. The Department of Labor’s rules generally strike the right balance. They should be preserved and strengthened, not undermined.”
AARP also opposes changes to electronic disclosure rules.