Why Don't Employees Read What We Send Them? Would Reading Mandatory Disclosures Make A Difference, Anyway? (Part One of Three.)

My corporate benefits experience confirms that, despite my best efforts, most of the mandatory benefits disclosures I wrote were never read.  That includes Summary Plan Descriptions (SPD), Summary Annual Report (SAR)s, etc.  It was disappointing.  These were often great works of literary achievement that, in my view, should have been submitted for awards!  Actually, I often toyed with the idea of putting a prize-winning ticket near the end of each disclosure just to see if anyone noticed and claimed the prize!  

Regardless of which survey you cite, few employees read the mandated benefits disclosures, understand the materials, truly understand their benefits and the available choices.  As a result, many miss the opportunity benefits present and undervalue the benefits offered.  This occurs despite plan sponsor experimentation with various different media and approaches – video, social media, texts, games, face to face meetings, etc.  

The ERISA Advisory Council, https://www.dol.gov/agencies/ebsa/about-ebsa/about-us/erisa-advisory-cou... has once again decided to investigate options to improve mandatory disclosures in 2017.(i)

Here are links to my written testimony delivered last week and what we at the PSCA propose:

• Summary Plan Description:  Replacing the SPD with what we call a “super-mini”, a one page summary delivered coincident with and consistent with I-9 compliance methods – at the time of hire.  It would be updated whenever the plan is changed.  It would be distributed annually as part of other mandated disclosures.  The super-mini SPD would confirm workers could call or email a request for an electronic copy of the plan document – making it easily, and readily available.  All other plan communications (mandated, marketing, etc.) would now reference specific plan document provisions.  
• Fee Disclosure to Participants:  We discourage changing 404(a)(5) participant-level fee disclosures.   Plan sponsors have already spent hundreds of millions in compliance costs to issue these disclosures - disclosures no participant specifically asked for, few read, fewer still understand, and even fewer still who will apply them in their benefits decision-making.  Instead, we encourage the Department of Labor to first prove up the cost benefit analysis it included in regulations finalized in 2012.  Then, eliminate, update or revise those regulations, as necessary.  Similarly, we encourage the DOL to adopt measurement metrics as part of any new mandated disclosures or any changes to existing mandated disclosures. This would put the agency in the position of having sufficient data to prove/confirm the value of the required disclosures.   

Click here to view the full written testimony. 

Next.  My verbal testimony.  

(i) For some of the prior Advisory Council recommendations regarding model notices, communications in the form of tips, principles, and samples, see their reports for 2015, 2013, 2010, 2009, 2007, 2005, and 2004.  
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