The Labor Department released Thursday its final rule allowing electronic disclosures of retirement information online or via email.
“This commonsense rule reflects today’s marketplace while retaining the ability of participants to choose how they receive their retirement information,” said Preston Rutledge, the assistant secretary of labor for the Employee Benefits Security Administration.
Rutledge added on a call with reporters that allowing electronic disclosures not only permits the use of modern technology but is “more efficient” during the current COVID-19 crisis.
Rutledge will leave his post at the end of May.
The rule, drafted in response to President Donald Trump’s 2018 executive order “Strengthening Retirement Security in America,” allows employers to deliver disclosures to plan participants primarily electronically, which will reduce printing, mailing and related plan costs by an estimated $3.2 billion over the next decade, Labor said.
The rule will make disclosures more readily accessible and useful for participants, but preserves the rights of those who prefer paper disclosures.
“The rule will rely on widely available technology to keep workers and retirees informed about their plans, while still preserving the option to receive retirement information by mail,” added Labor Secretary Eugene Scalia, in a statement. “As we look ahead to reinvigorating the American economy, the Department of Labor’s priorities include eliminating unnecessary burdens for employers that sponsor retirement plans and on addressing the needs of wage earners, job seekers, and retirees.”
The final rule allows retirement plan administrators to furnish certain required disclosures using the proposed “notice-and-access” model, Labor said.
Retirement plan administrators can use email to send disclosures directly to participants. “These administrators must notify plan participants about the online disclosures, provide information on how to access the disclosures, and inform participants of their rights to request paper or opt out completely,” Labor said.
The new rule also includes additional protections for retirement savers, such as accessibility and readability standards for online disclosures and system checks for invalid electronic addresses.
Susan Neely, president and CEO of the American Council of Life Insurers, said that the rule couldn’t come at a better time. “People are conducting business all the time over their phones and through other technologies,” she said in a statement. “Digital capabilities are more important all the time and that’s been amplified by COVID-19. It only makes sense for people to have access to information about their retirement plans when they want it, wherever they are.
Labor’s rule also “does a good job of addressing preferences of all plan participants by protecting those who prefer traditional paper.”
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