E-Delivery of Plan Documents Could save $500 Billion Annually: SPARK Institute

Electronic Delivery of Retirement Plan Documents

The SPARK Institute, a retirement plan industry advocacy organization, recently released a comprehensive white paper which examines the rationales for allowing plan sponsors to make electronic delivery the default method for communicating with retirement plan participants. The white paper, entitled “Improving Outcomes with Electronic Delivery of Retirement Plan Documents,” finds that switching to electronic delivery would produce $200 to $500 million in aggregate savings annually that would accrue directly to individual retirement plan participants.

“Directing participants to electronic mediums promotes the use of electronic tools that play an important role in better retirement outcomes,” said Judy Xanthopoulos, principal at Quantria Strategies, LLC., which produced the report on SPARK’s behalf. “This study finds that compared to distributing plan documents by mail, electronic delivery has significantly lower costs, with savings from printing, processing, and mailing.”

Many retirement plans would like, as a default, to distribute retirement plan information electronically. Participants would be given the right to “opt out” and receive paper communications at no additional charge. But current rules stand in the way. Depending on the nature of the information, any one of four different Internal Revenue Service (IRS) or Department of Labor (DOL) standards may apply.

“Electronic disclosure is more timely, more interactive, environmentally friendly, and produces superior outcomes for participants,” said Joseph Ready, president of The SPARK Institute. “It is critical that we communicate with savers in more innovative ways to enhance retirement knowledge and outcomes. Our experience tells us that plan participants of all ages embrace technology.”

Among the findings in the white paper:

“This research is incredibly timely because Congress is actively considering modernizing the rules that apply to retirement plan communications,” stated Michael Hadley, partner, Davis & Harman LLP, and outside counsel to The SPARK Institute. Last Congress, Senator Orrin Hatch (R-UT), who is now chairman of the Senate Finance Committee, included e-delivery rules in his Secure Annuities for Employee Retirement Act and yesterday similar legislation was introduced on a bipartisan basis by Representatives Jared Polis (D-CO) and Phil Roe (R-TN), the Ranking Member and Chairman of the Education and the Workforce Committee, and Mike Kelly (R-PA) and Ron Kind (D-WI), who both serve on the House Ways and Means Committee.

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