Retirement Plan Participants Should Embrace Electronic Communications
Retirement plan participants have a distinct preference as to how they receive plan communications — in print or electronically — depending on their age, gender, employment status and household assets. However, the cost savings and a few other benefits make the case for plan sponsors and record keepers to persuade retirement plan participants to embrace electronic communications.
In October 2019, the Department of Labor proposed a rule that would allow ERISA retirement plan participant disclosures to be posted online rather than having to be mailed. The idea was to lower the costs to employers of printing and mailing retirement plan participant statements and other disclosure notices. It was also designed to make them more easily accessible and useful for the approximately 60 million American employees who participate in a workplace retirement plan.
Eliminating the materials, printing and mailing costs of providing printed retirement plan participant disclosures would supposedly save a projected $2.4 billion over the next 10 years, per the DOL. However, while the cost savings are admirable, it doesn’t seem to phase retirement plan participants much. An article in Insurancenewsnet, a premier source for insurance and financial professionals, recently cited a study of retirement plan participants from The Secure Retirement Institute (formerly LIMRA SRITM). The survey was conducted to determine how retirement plan participants preferred to receive their retirement plan information. According to Insurancenewsnet, the researchers wanted to know: “Given recent advances in technology and greater access to the internet, is there greater interest in receiving all communications associated with retirement plans electronically?”
The results are in, and it appears there is no consensus among retirement plan participants on whether they prefer to receive plan communications in print vs. electronically. Around 40% of retirement plan participants say they prefer to receive communications from their retirement plan providers electronically, via email or an online portal. However, about 25% of retirement plan participants would rather receive paper copies, and 32% say they want to get retirement plan communications both electronically and in hard copy.
Record keeping is retirement plan participants’ primary reason for voicing a preference for paper communications (61%). Around 34% of retirement plan participants say they prefer paper communications because they’re easier to read. In addition, retirement plan participants say they are more likely to read their statements when they receive them in paper form. Three out of 10 retirement plan participants cited security as a positive for paper communications. Millennials and Gen Z retirement plan participants were most likely to prefer paper, as they say they believe electronic communication puts the security of their information at greater risk.
Of the retirement plan participants who prefer electronic communications, more than half (54%) say they like the convenience of being able to access their information anywhere. Interestingly, older retirement plan participants were more likely to say they preferred electronic communication (54% of Gen Xers and 68% of Baby Boomers cited this reason vs. 42% of Gen Z and Millennials).
Nearly half (47%) of retirement plan participants say electronic communications make recordkeeping easier, and 45% like it because it’s more environmentally friendly. The positive environmental impact was of particular import to women, those with more than $100,000 in household assets and those who are currently working and not retired.
The cost savings provide an incentive for plan sponsors and record keepers to persuade retirement plan participants to embrace electronic retirement plan communications, Insurancenewsnet noted. In addition, The Secure Retirement Institute study found that six in 10 retirement plan participants who currently receive paper communications would switch to electronic communications if they were given access to them via a secure portal.
According to Insurancenewsnet, the survey findings “suggest promoting the security, easy access and record keeping as well as environmentally friendly aspects of electronic communications can help persuade retirement plan participants to switch to electronic communications.” These arguments are a good place to start for plan sponsors and record keepers who want to convince retirement plan participants to switch to electronic communications.
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