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Compliance June 8, 2015
Bill Seeks More Digital Retirement Plan Communication
A group of Republican and Democratic members of the U.S. House
introduced the Receiving Electronic Statements to Improve Retiree
Earnings (RETIRE) Act.
Reported by John Manganaro
Representatives Jared Polis (D-Colorado), Phil Roe (R-Tennessee), Ron Kind (D-Wisconsin) and Mike Kelly (R-Pennsylvania) introduced bipartisan legislation last week they say would modernize the way employers communicate important retirement information by allowing plan sponsors to automatically opt participants into electronic delivery of documents.
According to the lawmakers, the Receiving Electronic Statements to Improve Retiree Earnings (RETIRE) Act would “catch up with Americans’ overwhelming shift towards digital communication while providing strong protections for those who prefer to receive paper documents.”
The representatives suggest that, under current law, employers “waste significant money and paper mailing documents like notices, disclosures and statements to retirees.” They estimate sending just one four-page notice to all U.S. retirement plan participants can cost up to $60 million on net—a number they call a conservative estimate.
“The RETIRE Act would reduce mailing costs, protect our environment by eliminating thousands of pieces of paper mailed each day, and make information more accessible to recipients,” says Representative Polis. “It’s time to bring our retirement information delivery capabilities into the 21st century.”
Representative Roe adds that today, more and more Americans are choosing to manage their finances online. “Our bill allows plan sponsors to auto-enroll beneficiaries into receiving plan documents electronically, while allowing those who prefer paper statements to continue receiving them at no cost,” he says.
Representative Kelly, who is co-chairman of the House Retirement Security Caucus, says employers who voluntarily offer 401(k) plans are “currently hampered by arcane and costly administrative rules for disseminating this information.”
“Our legislation will allow retirement management companies, such as Vanguard in my home state, to offer their consumers a way to receive information about plans electronically,” he says. “This will reduce costs for consumers and providers alike. It’s a win-win solution.”
The bill has already received marks of support from a number of retirement advocacy groups and product providers, including Vanguard. Martha King, managing director and head of Vanguard Institutional Investor Group, opines that electronic delivery “will enable us to better educate participants through linking to online tools and customized content that we believe will lead to better investing results … Vanguard commends the introduction of the RETIRE Act as it will provide a more cost-effective and efficient way for defined contribution plan providers to deliver important information to plan participants in a timely manner.”
Additional supporters of the bill include TIAA-CREF, SPARK Institute and American Benefits Council (see "Electronic Disclosure Rules Are So Last Century").
Text of the legislation is here.