Vice President, Retirement Policy, U.S. Chamber of Commerce
July 18, 2022
Currently, some consumer groups are threatening to sink the current “SECURE 2.0” retirement legislation that is working its way through the U.S. House and Senate unless it includes a provision requiring all plans to provide at least one quarterly paper statement to retirement plan participants even if they had opted to receive such information electronically.
While receiving paper mail is nostalgic and even helpful at times, there are many cases where electronic communications are preferred. For example, quarterly 401k account statements provided electronically allow people to see their investments in real-time, change investments, adjust contributions, and easily and quickly access explanatory plan materials with just a few clicks. In addition, electronic communications can be accessed whenever and wherever is most convenient.
In 2020, the Department of Labor (DOL) issued a regulation making it easier to provide retirement plan information electronically, while still allowing you to get your information on paper if that’s what you want. The last time DOL provided comprehensive regulations on electronic disclosures was in 2002, and a lot has changed in the last 18 years.
Since then, we have moved from the stationary internet of the early 2000s (think: “You’ve got mail”) that required you to physically be at a computer to a world where you can access nearly anything, anywhere, and at any time. The first smartphone that connected to the internet was available in 2001, but the cost of data made it inaccessible to the average American. However, in 2007, Apple brought us the iPhone, and just one year later 11.6 million iPhones were sold. Since then, there have been 34 new iPhone versions, and the Android operating system has exploded, along with the much lower cost plans and data. As of July 2022,6.65 billion people have smartphones, translating to nearly 84% of the world's population – up from just 49% in 2016. For Americans, the number is even higher – 85%.
So, why do some in Washington want you to receive paper copies of your retirement statements, even if you don’t want them and even though the default delivery method for the Federal Thrift Savings Plan (the federal 401(k) plan) has been electronic since 2003? It’s not cost savings because these paper statements cost more money to produce and send, and the production cost can be passed onto the consumers. It’s not access, because even those without smartphones, there is the internet, and for those without the internet, there are smartphones.
The reason we often hear is that older workers and retirees just aren’t wired. But let’s think about that. Over 30 years ago, on August 6, 1991, the World Wide Web was introduced to, well, the world, and by the mid-1990s the Internet Age had begun. So, today’s 65-year-old was 35 when the Internet Age began. And today’s 75-year-old, was only 45, making it highly likely that they were part of that trend. Even the data from the consumer group pushing for paper disclosure shows that their own members are perfectly comfortable with technology, especially after the pandemic. Noting that “[i]f a pandemic-driven acceleration of technology adoption among older adults characterized 2020, then 2021 in some sense can be seen as a year when tech introduction became tech habit.” So, then why is there a group pushing paper, even to the point of sinking any retirement legislation that doesn’t include this, when all this does is drive up cost without adding value? It seems you can push anything if you don’t have to pay for it.