Paper covers rock – but will it be enough to break scissors?
A consortium (an alliance of consumer organizations, labor unions, rural advocates, and print communications industry organizations) calling itself the Coalition for Paper Options – has officially called on the Trump Administration to reject a proposed rule by the Department of Labor allowing retirement plan fiduciaries to switch the current default delivery method for certain retirement plan disclosures from paper to electronic.
In a letter to Paul Ray, acting administrator of the Office of Information and Regulatory Affairs (OIRA), this consortium claims that “longstanding principles for regulatory planning and review, claimed administrative cost savings and unsubstantiated assertions do not justify government regulation.” They claim that the proposal is “primarily intended to save money for plan fiduciaries,” and runs afoul of the longstanding principle in President Reagan’s Executive Order 12291 that, “unless statutory language requires otherwise, agencies may only regulate if it will do more good than harm, and maximize net benefits to the public.”
There’s little argument that the proposal would save money, though apparently the CPO doesn’t understand who actually winds up bearing those costs. A report commissioned by the American Retirement Association and the Investment Company Institute in 2018 estimated that participants could save more than $500 million per year, assuming about eight participant mailings per year across more than 80 million 401(k) account holders. By contrast, once an electronic notice is drafted, the incremental cost of an email to one person is essentially zero, the study noted. And as discussed in the 2011 study, there are also enormous environmental benefits to e-delivery from the reduction of tons of discarded paper every year. A 2015 report prepared for the SPARK Institute offers similar findings, with estimated annual savings of shifting to e-delivery for retirement plan notices in the range of $300 million to $750 million per year.
Just as significantly, e-delivery has continued to improve access for the visually impaired and others with disabilities. For example, the study explains that electronic notices allows users with vision impairment or color blindness to adjust the font size, contrast and colors to their preference. In addition, individuals who do not have use of their hands may use speech recognition software to navigate a website. Moreover, advances in translation software have improved access for those who prefer to use a language other than English. Free translation software is now available to translate more than 100 languages, accounting for more than 99% of the online population. And – as the CPO acknowledges, any individual that wants to receive those notices in the traditional mediums can do so.
The proposal, “Improving Effectiveness of and Reducing the Cost of Furnishing Required Notices and Disclosures,” comes in response to President Trump’s 2018 Labor Day weekend Executive Order, “Strengthening Retirement Security in America.” That order directed the Labor Department to “explore ways to reduce the costs and burdens imposed on employers and other plan fiduciaries responsible for the production and distribution of retirement plan disclosures” required under title I of ERISA, as well as “ways to make these disclosures more understandable and useful for participants and beneficiaries.”
The current retirement plan disclosure rules were established more than a decade ago (2004). The Labor Department’s proposal was delivered to the Office of Management and Budget on August 16.
