Experts at the American Society of Pension Professionals &Actuaries say electronic delivery for legally required definedcontribution plan disclosures is more user-friendly and willhelp plan participants more easily understand and respond to theinformation provided.

ASPPA is urging the Department of Labor to make electronicdelivery the default mechanism for conveying disclosure notices andinformation to plan participants.

“The arc of change is overwhelmingly in the direction ofelectronic rather than paper delivery,” said Peter P. Swire,an expert on cyberspace and laws governing the Internet, who wascommissioned by ICI and ASPPA to undertake the study. “WithInternet access so widespread today, electronic disclosure isactually better in major respects than traditional paper delivery.There is a compelling case for the next DOL regulation to permitplans to choose a default rule of electronic delivery.”

Findings of the study are detailed in new white paper, "Delivering ERISA Disclosure for DefinedContribution Plans: Why the Time Has Come to Prefer ElectronicDelivery."

ASPPA reports that greater use of electronic delivery forlegally required plan disclosures also will provide "cost savingsfor plans, reduce environmental impacts, and meet statutoryrequirements and the goals of President Obama’s executive order ongovernment regulation."

E-Delivery Can Improve Disclosure for Investors; ProvideBetter Access The white paper explains that e-delivery canprovide better notice than paper delivery, in large part becausedisclosure can be “layered,” with a short and simple notice on topthat provides click-through access to more detailed disclosures forparticipants seeking more information. In addition, electronicnotice can provide “just-in-time” information to help participantsat the point of making decisions about their plans. Even ifelectronic delivery became the default method, individuals wouldretain the right to opt for paper notices instead.

Electronic delivery, contend Swire and Ahmad, also allowsparticipants to have access to information about their plansanytime, anywhere. In addition, they say, it gives participantsbetter information storage or filing options, and it providesalternatives for persons with disabilities, such as those who arevisually impaired.

“In a world in which the IRS now no longer mails annual taxforms, but instead makes them available online, we think plansshould be able to make electronic delivery the default option forrequired information for DC plans,” said ASPPA Executive Director and CEO Brian H. Graff.“Widespread and growing Internet access has and will continue tomake electronic delivery the modern day option for providingimportant disclosures to participants, while preserving the abilityof plan participants to receive paper notices if they wantthem.”

E-Delivery Also Can Reduce Costs and EnvironmentalImpact

A shift to e-delivery would mean reduced printing and mailingcosts for plans and thus potential savings for participants,according to the white paper.

For example, the authors contend that e-delivery of a single newfour-page notice could eliminate $36.7 million to $60.5 million peryear in printing and mailing costs. Switching to e-delivery forseveral common annual disclosures to participants would also reducethe environmental impact and could save as many as 11,600 trees or39 acres of forest annually.

“The DOL’s examination of the rules governing electronicdelivery is consistent with the Obama Administration’s push towardspromoting innovation and technology, and we applaud them forconsidering this important issue that could bring real benefits toparticipants in retirement plans” said ICI Senior Counsel forPensions Mary Podesta. “We hope this study will help educateregulators and the public about the current state of play ofInternet access and the benefits of providing information toindividuals electronically.”

Technological and Investor Considerations Support ShiftToward E-Delivery

The Swire-Ahmad paper makes clear that the advance oftechnological changes and widespread Internet access make the timeright for DOL to make e-delivery more readily available toparticipants. It pulls together research that demonstrates thatworking American families are almost as likely to have Internetaccess as they are to own a telephone.

Working households with DC accounts are even more likely to haveInternet access compared with other working households in similarage or income groups. Mobile devices reduce the digital divide andare speeding the convergence of Internet access by differentdemographic groups, the study notes. In addition, e-delivery offersimportant cyber security advantages, such as providing moresophisticated account user authentication.

The authors are submitting their white paper to the DOL as partof the public comment file on its request for information about how to change 2002 regulationsgoverning the choice between paper and electronic delivery forERISA notices and information. On June 6, ICI and ASPPA submitted separate comment letters to DOLin response to the RFI.