Members of Generation X believe they will need to save at least $1 million before they can retire. Who can help them save it?
By Cyril Tuohy
Despite the headlong rush to deliver documents electronically, a key U.S. government agency isn’t quite ready to recommend that private pension plans abandon pen and paper when communicating pension-related disclosures.
In complying with the Employee Retirement Income Security Act (ERISA), the Labor and Treasury departments should develop consistent requirements for default electronic delivery of pension disclosures, the Government Accountability Office (GAO) said.
Labor and Treasury also should consider requiring pension plan sponsors to provide participants with a chance to opt out of electronic delivery, the GAO said. It also recommended that Labor and Treasury consider requiring pension plans to send periodic notices to plan participants reminding them of their right to their preferred method of delivery.
While greater use of electronic disclosure lowers cost and broadens access, “paper disclosures continue to play an important role in meeting the needs of those not connected to the Internet or who prefer paper. Paper disclosures also help to locate participants when email communications are returned as undeliverable,” the GAO noted.
The report, submitted to Congress, is titled “Private Pensions: Revised Electronic Disclosure Rules Could Clarify Use and Better Protect Participant Choice.”
In a response, the Labor Department agreed with the first two GAO recommendations, but had no regulation regarding the third, on periodic notices. Assistant Labor Secretary Phyllis C. Borzi said it would be “appropriate” to consider periodic paper reminders.
Another finding of the GAO report is the disparity in Internet access among the nation’s different demographic groups.
Compiling statistics from 2010, the GAO found that across age, race, income, education levels, language differences and disability status, people have far more access to the Internet at home than they do at work.
Only 6.8 percent of households in the lowest income level had access to the Internet at work, but 53.6 percent of households in that level had access to the Internet at home. Conversely, 58.2 percent of households in the highest level reported having Internet access at work, and 73.8 percent said they had such access at home.
Only 3.6 percent of people with less than a high school diploma had Internet access at work, but 32.5 percent of those without a high school diploma had Internet access at home, the GAO said.
A total of 51.4 percent of those with a bachelor’s degree or higher reported having Internet access at work, the GAO also found, and 73.8 percent of those with a bachelor’s degree or higher reported having Internet access at home.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at Cyril.Tuohy@innfeedback.com.
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