With new fee disclosure rules set to begin in just over a month, the use of electronic communications to get plan details out to participants may be a critical step in more quickly meeting the letter of the law.
On Tuesday, a group representing 15 different retirement plan trade associations focused that issue with the Department of Labor in a letter, asking the agency to permit wider use of electronic means to share information with plan participants.
The coalition, including the SPARK Institute, ASPPA and ICI, appealed to EBSA, suggesting that the interim guidance on the use of electronic media, known as Technical Release 2011-03R, makes it practically impossible for plan sponsors and service providers to substitute electronic forms and emails for the bulky paper disclosures required.
The issue, discussed in a sesson at last week's ASPPA 401(k) Summit with Michael Davis, EBSA's deputy assistant secretary, echoes the DOL's continued insistence on providing both bulky, expensive and time consuming paper notifications to supplement electronic means, which Davis said he feels don't yet have wide acceptance or use among older consumers.
Tuesday's letter said DOL's newest release does little to clarify the issue, or incentivize moving disclosure documents into the less-costly electronic realm.
"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 for the SPARK Institute.
Goldbrum's organization recently conducted a survey and the results suggest that many in the industry feel the DOL's interim guidance doesn't provide enough meaningful incentives to provide electronic information to participants.
Instead, he says that he feels a majority of service providers will simply look past the Technical Release policy and instead go the paper route.
Cost is a significant factor, according to the coalition. Existing systems make it difficult to support the interim guidance without signifcant charges, and there's considerable impracticality in implementing and monitoring electronic systems at present.
As a contrast to the newer rulings, groups represented in the letter say they have more faith in the guidance created by the DOL more than five years ago, Field Assistance Bulletin 2006-03. It encouraged the use of electronic disclosure in benefit plans but also provided safeguards for participants who desired their information in a paper form.
"There is borad movement toward electronic delivery of information," said Brian Graff, ASPPA executive director and CEO. "Making e-delivery more available can also help keep the costs of retirement plans down by cutting down on paper statements that have to be prepared and mailed."
"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," added David Abbey, ICI's senior counsel on pension regulation.