As everyone in the retirement industry knows, retirement plan participants are inundated by a deluge of disclosures required by multiple reporting requirements set by a variety of government agencies. Posting recently about a Nov. 21, 2013, Government Accountability Office (GAO) report on pension reporting and disclosure requirements, two attorneys at Bryan Cave summarized some of the things the GAO found:
• The online resources of the DOL and other ERISA agencies are “not clear, comprehensive or up to date.” Neither the PBGC nor the IRS sites provide comprehensive information regarding reporting and disclosure requirements.
• The GAO found poor management of data at the DOL, IRS and PBGC, which it believes has resulted in the potential for misleading information included in notices provided to some retirees.
• The GAO tested 10 model notices from the three agencies against federal plain language guidelines and found that several of them failed to meet those standards. Failures included not explaining technical terms used in the notices and cross referencing other sources of information to understand the notices; not explaining what a participant is supposed to do with the information in the notice; and not providing language about assistance available to non-English speakers.
• The model notices required a level of reading comprehension ranging from a 10th-grade level to a college senior level (including the form blackout notice and ERISA rights statement).
In all, the GAO identified 70 different reports and 60 different disclosures arising from provisions of ERISA and the Internal Revenue Code. The report, “Clarity of Required Reports and Disclosures Could Be Improved,” was commissioned to look at how useful all the pension reporting and disclosure requirements are to sponsors, participants and government officials and determine whether there are ways to improve the system.
Brian Graff, executive director of ASPPA and NAPA, agreed with the study’s focus. “We have been pressing the point for several years that the number of disclosures is reaching the point of absurdity and that too much can become counterproductive as participants begin to tune them out," Graff said. “Participants are treating them like spam, and that’s not good for the system. We believe the current extensive menu of disclosures needs to be evaluated to eliminate clear redundancies as well as to allow for more consolidation to reduce their frequency.” Graff also advocated allowing more effective methods of electronic delivery.
