In response to a request for information issued by the Department of Labor on electronic disclosure regarding retirement plans to sponsors and participants, the SPARK Institute urged the DOL to issue rules that would allow "widespread use" of electronic media, rather than paper documents, the Institute announced Wednesday.
On April 7, the DOL issued a request for information to solicit public opinion on whether and how to expand or modify electronic distribution standards for plan disclosures. The comment period ends June 6.
Larry Goldbrum, general counsel for SPARK, noted in a press release that since workers have embraced electronic communication for almost every area of their daily lives, it's likely that "the vast majority of service providers, plan sponsors and American workers prefer, and would embrace, greater use of electronic communication for retirement plan communications."
“It is our opinion that electronic communications are inherently better and a more powerful medium than paper materials sent through the mail. Electronic communications are also less costly and more environmentally friendly,” Goldbrum said.
The SPARK Institute further urged the DOL to consider rules that would require disclosures distributed through electronic means to be available using any technology or hardware, and that disclosures be the "same for all defined contribution plans, all materials and all recipients."
SPARK's letter to the DOL noted that that most common method of communicating plan information to participants was to email a notice that updated information was available on a website, and include a link and directions for viewing information.
Sponsors' interest is high, but cumbersome rules are hindering their ability to take advantage of cheaper, faster forms of communication. Current regulations are the "single most significant impediment" to increasing electronic communication, according to SPARK, specifically safe harbor rules that limit a sponsor's "ability to use electronic communications in an efficient and cost effective way."
Safe harbor rules need to be revised, SPARK insists, as the "use of electronic communications in accordance with the safe harbor has been very low, which indicates that it is not meeting the needs of the retirement plan community," the letter states. Furthermore, current rules are inconsistent with requirements from other agencies such as the IRS and SEC.
Despite increases in the number of participants who choose to receive disclosure documents online, SPARK noted that due to participant inertia, an opt-out framework may be the best way for sponsors to take advantage of the cost savings afforded by electronic communication.
The full letter from the SPARK Institute to the DOL is available here.