Why Don't Employees Read What We Send Them? Do Mandatory Disclosures Make A Difference? Does Anyone Have A Better Idea? Part Three of Three

I am hopelessly jaded by my personal experiences as a plan sponsor - as noted in my written testimony:

• There are way too many mandated disclosures, and
• There is no effective differentiation or prioritization of the hundred or so mandated benefits disclosures,  so
• These disclosures have little or no importance to already time-starved participants.  

I called this the “accumulation problem” in my recent testimony before the DOL’s ERISA Advisory Council.  Earlier in 2012, before those rules took effect, I wrote:  

“Over the next ten years, let’s increase the fees paid by individual account plans, like the 401k, by nearly $4 billion so as to deliver fee and investment mandated disclosures that no participant specifically asked for, few will read, even fewer will understand, and still fewer will correctly apply in their investment decision-making. …  (I assert) that the mandated disclosures will achieve neither the stated goals nor the estimated savings. …”

The only objective metric the DOL incorporated in the fee disclosure rules was a conclusion that participants would see a reduction in the amount of time spent looking for fee information.  Surveys prior to those regulations showed participants were not looking for fee information.  Most participants didn’t know they were being charged fees.  More recent surveys show little has changed.  One 2015 survey, taken more than two years after the mandated disclosures took effect, showed 58% of surveyed participants still thought they paid no fees. See:  http://www.ireachcontent.com/news-releases/42-million-people-do-not-know-they-are-paying-any-fees-on-their-workplace-retirement-plans-505809961.html

My testimony and recommendations were consistent with recent White House Executive Orders focused on reducing the burden of regulations – see:  

• Clinton:  Executive Order 12866, http://govinfo.library.unt.edu/npr/library/direct/orders/2646.html  
• Bush: Executive Order 13422:  http://www.presidency.ucsb.edu/ws/?pid=24456  
• Obama:  Executive Order 13563:  https://obamawhitehouse.archives.gov/the-press-office/2011/01/18/executi...  
• Trump:  Executive Order 13771:  https://www.gpo.gov/fdsys/pkg/FR-2017-02-03/pdf/2017-02451.pdf  
• Trump:  Executive Order 13777:  https://en.wikisource.org/wiki/Executive_Order_13777  

However, the regulatory burden from the federal government is increasing, not declining.  Consider, in 2016:

• Congress enacted 214 laws, while federal agencies issued 3,853 rules. 
• The 2016 Federal Register contained 95,894 pages, the highest level in its history, 19% higher than 2015’s 80,260 pages, and 
• The Code of Federal Regulations now contains 185,053 pages, versus 22,877 pages in 1960.

Clyde Wayne Crews Jr. of the Competitive Enterprise Institute estimates that the costs of complying with federal rules and regulations totaled nearly $1.9 trillion in 2016, adding half again to the burden from the federal government – increasing that burden from $3.8 trillion to $5.7 trillion.  See:  https://cei.org/10KC  

I’d like to offer a challenge. Please read my prior two blogs and written testimony. Consider our recommendations  to help reduce the burden of mandated disclosures.   I challenge you to offer better ideas.  Send them to me at [email protected]. 

Help!