© 2024 Pension Rights Center. This work is licensed under a Creative Commons Attribution-Non Commercial 2.5 Generic License.
By Karen Friedman
The Department of Labor, the agency charged with protecting workers’ and retirees’ retirement rights, wants to adopt a new rule that would make it harder for you to get the information you need to plan for your retirement and watchdog your pension or 401(k) plan. The deadline for the public to respond to this proposal is only days away – this Friday, November 22nd.
When Congress passed the federal private pension law, ERISA, they understood that receiving key information about your retirement plan would be necessary for you to understand and enforce your rights. That’s why, if you’re participating in a retirement plan, you now get really important information telling you about the rules of your plan, how much you’ve earned, how your investments work, the fees you are charged and whether your employer has made changes to your retirement plan.
That is because, unless you work at a computer – are “wired at work” as the Labor Department calls it – or have told your employer that you would like to go “paperless,” you receive information about your retirement plan on paper through the mail. That’s a sensible rule that protects consumers.
However, the Department of Labor, caving in to lobbying by the financial services industry, now proposes not only to reverse the current system, which works well, but also to replace it with something called, “notice and access” (if that term doesn’t make your eyes glaze over, what would?) What this means is you would get an e-mail or text that lets you know that one or more important documents are available on a website – and then you would have to go down the rabbit hole to hunt for information. If you don’t have an e-mail address, the Department says that the plan can assign one for you.
If this rule is adopted, you would get a one-time paper notice telling you that you have a chance to opt out of this Alice in Wonderland scheme. However, the proposed rule doesn’t say how consumers would be able to ask for paper documents. Would you have to make a phone call, write a letter, send an e-mail? Your guess is as good as ours. And, given how busy our lives are and how far off retirement seems, how likely is it that you would do any of these things?
Sure, the world is changing, and many more people are using computers and smartphones to access the internet, but this doesn’t mean that everyone should be forced to read on screens. The fact is, that access to the internet is nowhere near uniform or equitable. Studies show that it still varies substantially by education, age, income and geography.
Clearly, the rule was written for financial institutions, employers and plan trustees, not for consumers. According to the Labor Department, this new framework will save retirement plans $2.4 billion over 10 years. Those responsible for administering retirement plans are required by the law to make decisions solely for the benefit of participants and beneficiaries, not to line their own pockets. Yet this proposed rule imposes no requirement for plans to pass on these savings to participants. Instead, the rule will make certain that millions of retirees and workers and spouses will have to spend more money to buy new computers, software, and printers, and pay for costly WiFi or broadband services – unless they are willing to travel miles to wait in line at public libraries to read, what is often complicated, lengthy and highly personal information – and then be fearful that their information could be stolen or hacked in these public spaces.
The bottom line is that everyone participating in a pension or retirement savings plan has the right to receive critical information. But this new proposed rule makes it likely that too many current and future retirees will never get these important disclosures – and the sad truth is, they may never even know what they don’t know – until it is too late.
Please consider taking a moment to submit a short letter opposing this misguided, anti-worker, anti-retiree proposal. Tell the Labor Department to withdraw the proposed rule, or at least extensively overhaul it to make sure people actually receive the disclosures that could make or break their future economic security.
