We’ve only just passed the effective date for the new e-delivery rules—but the campaign to undermine their impact is already underway.
Coincident with the official effective date of the new rules, the Pension Rights Center, a pension advocacy group, has just unveiled an “Ask for Paper” campaign in which it is pushing retirees and workers to “to tell their pension and 401(k) plans that they want to continue receiving their key retirement information on paper…”
That’s right—they are asking[i] for workers to proactively ask for plan information the “old-fashioned” way.
Now, there’s nothing wrong with that. The beauty of the Labor Department’s rule on e-disclosure[ii] is that it doesn’t require anybody to change anything. Not only are the old[iii] safe harbor rules still in place, even for those plans that do adopt the new rule, any worker who wants to keep getting paper has the option to do so. And, if the worker changes their mind at some point in the future, they have the option to do that as well.
That said, the PRC’s campaign is built on some odd assumptions, a clear paranoia that this is all an insidious design to hide and/or keep important information from workers, and one out-and-out—well, let’s call it a “misstatement.” Specifically, their list of “Top 10 Worst Things” about the new rule leads off with a claim that “workers and retirees won’t automatically get their quarterly statement showing how much money they have or where the money is invested.” That raised my eyebrows—for about a second. But in the final rule, the Labor Department reconsidered that approach, and now says that quarterly statements cannot be provided via a single annual notice of internet availability, and must be disclosed with an individual notice of internet availability each quarter.
The PRC even makes an issue of the possibility that notice of document availability might actually (I hope you’re sitting down) require you to “copy and paste a web address into the browser” because the final rule doesn’t require an imbedded hyperlink. Of course, sometimes those imbedded hyperlinks trigger spam flags—and some people only get text emails, rather than HTML—which would render an imbedded HTML link—well, useless.
Additionally, not only are plan administrators prohibited from charging covered individuals a fee in connection with their exercise of their right to continue to receive paper, the rule states that plan administrators are also prohibited from having “procedurally cumbersome or complex processes for exercising these rights.”
Though the PRC waxes on with concerns that information will be hidden or hard to find, it has no compunction about the plan administrator maintaining those documents in perpetuity—even after they have been replaced/superseded with a newer version. In their view a requirement that only the most current, applicable document be available is tantamount to “having plan information on an Etch A Sketch. Here today—wiped out tomorrow.” Of course, nothing in the e-delivery rule keeps individuals from warehousing their own copies—nor does it change the responsibility of the plan administrator to make available documents relative to a particular line of issue or inquiry. The documents don’t “disappear,” nor do individual participants’ and retirees’ rights to those documents.
As for concerns about website access and visibility, the rule clearly states that covered documents “must be presented on the website in a manner calculated to be understood by the average plan participant.” Moreover, the Labor Department notes that a website address or hyperlink must be “sufficiently specific” to provide ready access to a covered document.
Oddly, the PRC claims that the rule “contradicts long-standing Labor Department guidance and a Supreme Court decision.” With regard to the former, the PRC apparently glosses over the final rule’s repeated references to methods “reasonably calculated to ensure actual receipt of the information by plan participants”—by apparently imposing its own assumption that e-delivery is incapable of doing so.
As for the latter, the PRC references the recent Supreme Court decision involving Intel, which drew a pretty strict line around what constitutes “actual knowledge” (holding that even visiting a website where information was stored wasn’t sufficient to establish actual knowledge of what was on that website). Now, PRC chooses to see that as a proxy for a determination that e-delivery isn’t sufficient—but conveniently fails to mention that the traditional snail-mail delivery of information to a last known address wouldn’t even have the proof of access, much less knowledge.[iv]
Ironically, the current paper-based system takes for granted a number of essential elements of effective disclosure: It assumes that English is an appropriate language for every reader/recipient, that those reader/recipients are actually able to read the text in the font size in which the disclosure is printed, and—perhaps most critically—that you actually receive the disclosure in a readable condition. However, the PRC says that the e-delivery standard lets plans “off-the-hook” because under that standard, plans “don’t have to make sure you’ve read or opened the notice they sent.” As though there’s any validation of snail-mail receipt, much less notice that it’s been opened.
In contrast, with e-delivery, if the plan administrator can’t actually know that recipients read the materials, they can at least know that it arrived. Indeed, the new rule insists that those receipts be monitored—and if not delivered successfully, the plan administrator must remedy that situation or an “opt out” to paper is presumed.[v] Moreover, from the standpoint of the recipient, the electronic format means that language apps can readily translate the disclosures from English to a more familiar tongue, and visually impaired readers can adjust font size, contrast and back lighting—unlike the one-size-has-to-fit-all of the current paper format.
Perhaps the biggest question of all is access. The PRC cites surveys that suggest that older workers and lower income workers have less effective access to the web than most. But the Labor Department cites other surveys (including some of the same surveys) that tell a different story. That said, the admonitions of the rule with regard to ensuring, validating and maintaining valid contact information seem well designed to ensure those results.
The PRC says it is “astonished” that such a move would be announced in “the midst of an unprecedented health crisis and economic collapse,” though the timing strikes me as particularly prescient. What better time, after all, to at least consider a change to the convenience and availability of electronic delivery than when so many have been abruptly forced from their customary locations of receipt—particularly in view of the earlier concerns about transmission of the COVID-19 virus via packages and the like. And how about the health and safety of those who are expected to prepare, print and distribute those notices?
I “get” the affinity for paper. While I’m an avid consumer of e-books, I still appreciate the tactile feel of turning a physical page, the heft of a good book in my hands, the ability to quickly scan ahead to see how much of a chapter remains (kindle’s electronic assessments don’t tend to be very accurate for my reading pace). But let’s not forget that those who want their plan disclosures in paper form can still get them that way.
And let’s also not forget that the current default delivery method is (very) expensive,[vi] has no real method of validation in terms of access or receipt, and suffers from a number of significant limitations when it comes to reliably and effectively conveying this important information.
Indeed, in view of the cost, deliverability and impact shortcomings associated with traditional direct mail campaigns, one can’t help but wonder if the “Ask for Paper” campaign is being conducted… electronically.
[iii]Though they do date back to 2002.
[iv]They also fail to mention that the Supreme Court didn’t “foreclose any of the ‘usual ways’ to prove actual knowledge at any stage in the litigation,” and that “Plaintiffs who recall reading particular disclosures will be bound by oath to say so in their depositions.” The unanimous opinion noted that “actual knowledge” can also be proved through “inference from circumstantial evidence,” and noted that “this opinion does not preclude defendants from contending that evidence of ‘willful blindness’ supports a finding of ‘actual knowledge.’” Something that arguably would be easier to establish with actual data about web access and email opens than suppositions about snail-mail delivery and opening.
[v]“If a plan administrator learns of an invalid or inoperable electronic address (e.g., the email is returned as undeliverable or ‘bounces back’ and the problem is not promptly cured), the plan administrator must treat the covered individual as if he or she had elected to opt out of electronic delivery under paragraph (f)(2).”
— to www.napa-net.org