On July 27, the U.S. Department of Labor (DOL) put a new rule into effect that allows employee benefit plan administrators to use an electronic “notice-and-access” disclosure system as the default method of communication, making it much more difficult for millions of Americans who currently receive critical, paper-based information about their 401k, pension and retirement plans to access this information. This includes information called for under the Employee Retirement Income Security Act (ERISA), including quarterly benefits statements, plan summaries and plan changes.
This new rule puts many at a disadvantage, particularly the 10% of Americans who say they do not use the internet. According to a 2019 Pew Research Center survey, the size of this group has changed little in recent years, despite ongoing government and social service programs to encourage internet adoption in underserved areas. Among those most disadvantaged by this new rule are senior citizens, (27% of whom do not use the internet), low-income families, people with disabilities and those living in rural or other areas with little or no access to the internet.
Under the new rule, retirement plan administrators will be required to provide workers and retirees with a one-time paper notice of the switch to electronic delivery unless they opt out and request paper.
Plan participants will then be notified via email or text message whenever new documents have been posted online. Even though plans will be required to notify participants when new documents are available, participants may need to enter passwords and search complex websites to find their 401k or pension information. Moreover, the rule generally requires documents to be made available for only one year, so participants would not have a permanent record unless they download and save documents themselves.
Plan participants can choose to opt out of electronic delivery and request paper statements by contacting their employer or retirement plan administrator directly.
Beyond limiting the access of millions of Americans to essential and legally required financial information, the new DOL rule also dilutes the practical purpose of notice and elevates cybersecurity risks by orders of magnitude. The DOL clearly ignored the variety of reasons why consumers had previously chosen not to opt in to electronic notifications. And now, as this rule change is quietly forced on those who are disadvantaged by paperless notification (during a pandemic!) the government is treating the immediate lack of objection by consumers as “implied consent.”
As unsolicited and nonconsensual texts and emails flow to retirement plan holders, important notice from legitimate parties may be ignored as spam. Worse, however, no protections are in place to guard against cyber criminals who will use this new rule as a new pretext in phishing, ransom and malware, and countless other digital exploits where the burden and harms fall on the consumer.
Consumers did not ask for this change, and Keep Me Posted (KMP) believes the U.S. DOL is undermining its mission to promote the welfare of and assure work-related benefits for wage earners and retirees. KMP asks our supporters to make all of their constituencies aware of this ill-advised new DOL rule, and encourages all Americans who prefer to receive their retirement benefits information on paper to contact their employers or plan administrators to opt out of electronic delivery.