Back in October 2019, the U.S. Department of Labor (DOL) proposed a rule allowing mandatory ERISA retirement plan disclosures to be posted online to reduce printing and mail expenses for employers and make disclosures more readily accessible for the 60 million Americans who participate in an employer-sponsored retirement plan.
The proposed rule would permit plan administrators to use electronic delivery as the default option to plan participants and beneficiaries with valid electronic addresses unless they specifically opt out of electronic delivery.
According to the DOL this would save an estimated $2.4 billion in costs over the next 10 years by eliminating materials, printing and mailing costs associated with providing printed disclosures.
Naturally this begs the question, do 401k plan participants want to receive electronic statements instead of printed statements in the mail?
Turns out, there is no great consensus among consumers for any specific format (paper only, electronic only or both), according to a new study from the Secure Retirement Institute (formerly LIMRA SRI), which surveyed consumers who save in an employer-sponsored retirement plan to find out how they preferred to get their retirement plan information.
Four in 10 say they prefer to receive communications from their retirement plan providers electronically through email or an online portal. One quarter prefer to receive paper copies and 32% want to receive communications from their retirement plan provider both electronically and in hard copy.
The primary reason consumers give for preferring paper communications is recordkeeping (61%). More than a third (34%) say paper communications are easier to read and that they are more likely to read the communications in paper form.
Security was cited by 3 in 10 consumers—this is especially true for Millennials and adult Gen Z consumers who believe their information is more at risk with electronic communications than paper copies.
For those who favor electronic communications, more than half (54%) say it is because they can access the information almost anywhere. Surprisingly, this increases with age (42% of adult Gen Z/Millennials select this reason versus 54% of Gen Xers and 68% of Boomers).
Forty-seven percent say it is easier for recordkeeping and 45% believe electronic communications are more environmentally friendly. Being environmentally friendly was especially appealing to women, those with more than $100,000 in household assets, and those who are currently working and not retired.
Given the cost savings, it would be advantageous for plan sponsors and recordkeepers to persuade their workers to accept electronic communications. The study found the majority (6 in 10) of retirement plan account holders who currently receive paper communications would accept receiving communications via a secure online portal.
Findings suggest promoting the security, easy access and recordkeeping as well as environmentally friendly aspects of electronic communications can help persuade plan participants to switch to electronic communications.
SEE ALSO:
- 401k Electronic Disclosure Closer to Implementation
- DOL Releases Proposed Retirement Plan Electronic Disclosure Rule
- ‘Big Paper’ Fights DOL 401k Electronic Delivery Reg
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
