PRIVATE PENSIONS

Revised Electronic 

Disclosure Rules 

Could Clarify Use 

and Better Protect 

Participant Choice

Report to Congressional Requesters

September 2013

GAO-13-594

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-594, a report to 

congressional requesters

September 2013

PRIVATE PENSIONS

Revised Electronic Disclosure Rules Could Clarify 

Use and Better Protect Participant Choice

Why GAO Did This Study

With the advent of new technology, 

sponsors of U.S. private-sector 

pension plans have begun to deliver 

plan information to participants 

electronically in an effort to reduce plan 

costs and provide greater participant 

choice. Yet there are concerns that use 

of electronic disclosure could make it 

more difficult for some plan participants

to receive important information about 

their plans. GAO was asked to review 

issues related to electronic disclosure.

For this report, GAO: (1) examined the 

extent to which law and regulations 

permit electronic disclosure to 

participants; (2) explored the reported 

advantages and disadvantages 

associated with electronic delivery; and

(3) evaluated the weaknesses

identified, if any, in the agencies’ 

electronic delivery requirements. In 

conducting this work, GAO reviewed 

and analyzed relevant federal statutes 

and regulations; stakeholder 

responses to Labor’s 2011 request for 

information on electronic disclosure;

and any weaknesses identified in 

interviews of participant advocates and 

industry representatives, selected by 

GAO to capture a broad array of 

perspectives.

What GAO Recommends

GAO recommends that Labor and 

Treasury consider clarifying regulatory 

requirements and expanding 

participants’ ability to opt out of 

electronic delivery. In its written 

comments, Labor generally agreed 

with the report’s findings and 

recommendations. Treasury and the 

Pension Benefit Guaranty Corporation 

did not provide formal written 

comments. All three agencies provided 

technical comments.

What GAO Found

Federal statutes and regulations under the purview of the Department of 

Labor (Labor) and the Department of the Treasury (Treasury) allow 

employers who sponsor private pension plans to furnish all pension 

disclosures to participants electronically: 

• as the default delivery method if participants meet specific criteria 

regarding access, or

• if affirmative consent is obtained. 

When neither of these conditions can be met, or when requested by 

participants, plan sponsors must send paper disclosures.

Industry representatives and participant advocates reported various 

advantages and disadvantages concerning the use of electronic delivery. 

Both groups agreed that the popularity of electronic delivery was growing 

due to various efficiencies—such as reduced costs and better tracking of 

disclosures—that can be advantageous to both pension plan sponsors 

and participants. However, both groups also raised concerns with the 

requirements associated with electronic delivery, citing issues with their 

lack of consistency and clarity as well as concerns that they may not 

adequately protect a participant’s right to opt to receive paper disclosures. 

Pros and Cons of Electronic Delivery of Pension Disclosures 

GAO’s analysis of these concerns identified several weaknesses in the 

current electronic delivery requirements. For example, although agencies 

are to draft regulations that avoid inconsistency across agencies and are 

easy to understand, GAO found that Labor’s and Treasury’s requirements 

describing which participants qualify for default electronic delivery to be 

somewhat inconsistent and unclear, which may impede use of electronic 

delivery by some plan sponsors. GAO also found that, although 

participants may request paper disclosures at any time, requirements 

permitting default electronic delivery and sponsors’ use of a secured 

website to furnish disclosures may not fully protect a participant’s ability to 

choose paper as their preferred delivery method on an ongoing, rather 

than a document-by-document, basis. 

View GAO-13-594. For more information, 

contact Charles A.Jeszeck at (202) 512-7215 

or jeszeckc@gao.gov. 
Page i GAO-13-594 Electronic Disclosure

Letter 1 

Background 3

Electronic Delivery Allowed for All Plan Disclosures under Certain 

Circumstances 11

Various Advantages and Disadvantages Reported Concerning the 

Use of Electronic Delivery 19

Reported Disadvantages of Electronic Delivery Requirements 23

Certain Electronic Disclosure Requirements Are Somewhat 

Inconsistent and Unclear, and May Not Fully Protect 

Participant Choice 28

Conclusions 32

Recommendations for Executive Action 33

Agency Comments and Our Evaluation 33

Appendix I Internet Access for Individuals Age 15 and Older, by 

Selected Characteristics (2010) 35

Appendix II Comments from the Department of Labor 36

Appendix III GAO Contact and Staff Acknowledgments 40

Tables

Table 1: Examples of Participant Disclosures Required by Law 7

Table 2: Criteria for Allowing Default Electronic Delivery of 

Disclosures, by Agency 14

Table 3: Criteria for Obtaining Affirmative Consent for Electronic 

Delivery of Disclosures, by Agency 17

Figures

Figure 1: Number of Pension Plans and Participants, by Plan Size 

and Type (1975-2010) 5

Figure 2: Rising Percentage of Households That Connect to the 

Internet at Home, by Age and Educational Attainment of 

Head of Household, 2001-2011 9

Contents 
Page ii GAO-13-594 Electronic Disclosure

Figure 3: Procedures for Identifying Participants Who Qualify for 

Electronic Delivery 13

Figure 4: Pros and Cons That May Affect a Participant’s Choice of 

Delivery Method for Pension Disclosures 27
Page iii GAO-13-594 Electronic Disclosure

ABBREVIATIONS

DB defined benefit 

DC defined contribution 

ERISA Employee Retirement Income Security Act of 1974

E-SIGN Electronic Signatures in Global and National 

Commerce Act

PPA Pension Protection Act of 2006

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Page 1 GAO-13-594 Electronic Disclosure

441 G St. N.W.

Washington, DC 20548

September 13, 2013

The Honorable Tom Harkin

Chairman

Committee on Health, Education, Labor and Pensions

United States Senate

The Honorable George Miller

Ranking Member

Committee on Education and the Workforce

House of Representatives

The Employee Retirement Income Security Act of 1974 (ERISA)1

The proliferation of new forms of electronic devices and communication 

over the last decade and changes in how some employees access 

information have changed the way some employers communicate with 

their employees, leading some private-sector plan sponsors and 

participants to seek to expand use of electronic media to furnish plan 

information to participants. In 2011, in response to an executive order

requires 

private-sector employers sponsoring pension plans to issue a variety of 

informational notices to plan participants and beneficiaries, including at 

enrollment, on a quarterly and annual basis, and when certain events 

occur, such as job or plan termination. The Department of Labor (Labor) 

and the Department of the Treasury (Treasury) are responsible for 

overseeing this disclosure regime, with the purpose of ensuring that 

participants and beneficiaries have access to plan information to help 

them make informed decisions about their retirement. Such information is 

especially important for the tens of millions of participants and 

beneficiaries who are responsible for making investment decisions 

regarding contribution levels, asset allocation, and adequacy of savings in 

their plans.

2

 

1 Pub. L. No. 93-406, 88 Stat. 829 (codified in part at 29 U.S.C. §§ 1002 -1461).

and other administration policies encouraging electronic dissemination of 

information, Labor solicited public views, suggestions, and comments on 

whether—and possibly how—to expand or modify the department’s 2002 

2 Exec. Order No. 13,563, 76 Fed. Reg. 3,821 (Jan. 21, 2011) (calling on federal agencies 

to retrospectively consider existing policies to seek to achieve regulatory goals using the 

most innovative and least burdensome tools).

 
 

Page 2 GAO-13-594 Electronic Disclosure

electronic disclosure regulations for pension plans to take into account 

current technology, best practices, and the need to protect the rights and 

interests of participants and beneficiaries. In its request for information,3

You asked us to explore several aspects of electronic disclosure. This 

report: (1) examines the extent to which federal law and regulations 

permit electronic disclosure to participants; (2) explores the reported 

advantages and disadvantages associated with the use of electronic 

delivery of retirement information; and (3) evaluates the weaknesses 

identified, if any, in the agencies’ requirements for use of electronic 

delivery.

Labor acknowledged the need to balance the efficiencies of electronic 

disclosure—lower employer costs and administrative burden, timeliness, 

and accuracy—with protections for U.S. workers who may not have 

reasonable access to the Internet or simply prefer to receive traditional 

paper disclosures.

To examine the extent to which federal laws and regulations permit 

electronic disclosure, we reviewed and analyzed the relevant federal 

laws, regulations and guidance related to providing plan information to 

participants electronically; interviewed officials at Labor and Treasury; 

and consulted relevant literature. Next, we conducted a comparative 

analysis of the relevant Labor and Treasury regulations governing 

electronic delivery to determine which disclosures and which participants 

qualified for electronic delivery. We limited the scope of our analysis to 

the pension-related disclosures that plan sponsors are required to furnish 

to participants and did not examine other disclosures required for 

employee benefit plans such as those applicable to health and welfare 

programs, those required under the purview of the Pension Benefit 

Guaranty Corporation, or participant disclosures provided by the 

agencies. In this report, we use the term “participants” in general 

reference to all active, retired, and separated vested participants and their 

beneficiaries (e.g., surviving spouses and alternate payees) who are 

entitled to disclosures under Title I of ERISA and the Internal Revenue 

Code.

 

3 Request for Information Regarding Electronic Disclosure by Employee Benefit Plans, 76 

Fed. Reg. 19,285 (Apr. 7, 2011). Labor received 78 responses to its 2011 request for 

information. Labor officials said that they continue to review these and have made no 

decision as to whether the department will issue new regulations on electronic disclosure. 
 

Page 3 GAO-13-594 Electronic Disclosure

To explore the reported advantages and disadvantages associated with 

the use of electronic delivery, we analyzed the 78 written responses from 

participant advocates and industry representatives to Labor’s 2011 

request for information on electronic disclosure; reviewed relevant 

literature; and conducted semi-structured interviews with 21 

representatives from 11 participant advocacy groups and with 57 industry 

representatives (including individuals from 10 service providers, 8 plan 

sponsor advocacy groups, and 2 large plan sponsors). The interview 

information gathered was not generalizable beyond the individuals we 

interviewed. However, to ensure that we gathered input from entities that 

represented large numbers of plans and participants, we selected service 

providers ranked among the largest 31 recordkeepers (as ranked in 2011 

by Pensions & Investments) for assets under management, plan 

sponsors served, and number of participants, and who served plan 

sponsors of both large and small pension plans. To select plan sponsors, 

industry representatives, and participant advocates for interviews, we 

used an iterative process to identify knowledgeable stakeholders, and 

selected for interviews those who would provide us with a broad range of 

perspectives on issues surrounding the electronic disclosure of pension 

plan and retirement information. At each interview, we solicited names of 

additional stakeholders it would be useful to interview until we had 

coverage of a broad range of perspectives on electronic disclosure.

To evaluate any weaknesses in the agencies’ requirements for electronic 

delivery, we examined the laws and regulations related to the concerns 

raised by industry representatives and participant advocates. Based on 

this review, we identified ways that the requirements for electronic 

delivery could be improved to help address their concerns.

We conducted this performance audit from September 2012 to August 

2013 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for findings and 

conclusions based on our audit objectives.

ERISA requires the disclosure of certain pension plan and investmentrelated information, including fee and expense information, to participants 

in private-sector plans. The Internal Revenue Service at Treasury and 

Employee Benefits Security Administration at Labor are primarily 

responsible for enforcing laws that govern these plans. Treasury 

interprets and enforces provisions of the Internal Revenue Code that 

Background 
 

Page 4 GAO-13-594 Electronic Disclosure

apply to tax-qualified plans. Labor enforces ERISA reporting and 

disclosure provisions and fiduciary responsibility standards, which among 

other things, concern the type and extent of information provided to plan 

participants.

Private-sector pension plans are classified either as defined benefit (DB) 

or as defined contribution (DC) plans.4

 

4 Under ERISA, DB and DC plans are referred to as pension plans rather than retirement 

plans. 29 U.S.C. § 1002(34) and (35).

DB plans generally offer a fixed 

level of monthly retirement income based upon a formula specified in the 

plan (which often takes into account factors such as years of service and 

age at retirement), regardless of how the plan’s investments perform. In 

contrast, in DC plans, such as 401(k) plans, benefit levels depend on the 

contributions made to the plan and the performance of the investments in 

individual accounts, which may fluctuate in value over time. Over the past 

4 decades, DC plans have become the principal retirement savings 

vehicle for U.S. workers participating in employer-sponsored plans. Unlike 

employees with more traditional DB pensions, participants in DC plans 

typically bear responsibility for funding and managing their investments in 

a way that seeks to achieve sufficient benefits in retirement. The rapid 

growth in participant-directed DC plans has shifted much of the 

investment risk and decision-making from the plan sponsor to the 

participant. In 2010, Labor reported that U.S. employers sponsored 

46,543 DB plans with about 41 million participants and 654,469 DC plans 

with about 88 million participants. As shown in figure 1, there has been a 

significant growth in the number of small DC plans; however, the majority 

of participants are in large DC plans.

Types of Plans
 

Page 5 GAO-13-594 Electronic Disclosure

Figure 1: Number of Pension Plans and Participants, by Plan Size and Type (1975-2010)

Note: Labor’s Form 5500 data define small plans as those with 1-99 participants and large plans as 

those with 100 or more participants. Participants are defined as active employees, retirees, and 

separated employees with vested benefits.
 

Page 6 GAO-13-594 Electronic Disclosure

According to the most recent employee benefits survey by the U.S. 

Bureau of Labor Statistics, employee participation in employer-sponsored

plans remained low in 2012, with 65 percent of private-industry 

employees having access to plans and 48 percent participating in their 

employer-sponsored DB or DC plan. In addition, the data show that one 

in four employees who had access to a plan through their employer did 

not enroll in their employer’s plan. Moreover, the overall enrollment rate 

for high-wage employees in DC plans was twice the enrollment rate of 

low-wage employees. In response to concerns that many employees 

were not participating in the DC plans offered by their employers, the 

Pension Protection Act of 2006 (PPA) included various incentives for 

employers to adopt autoenrollment.5 Under autoenrollment, plan 

sponsors enroll employees automatically into their DC plans, unless 

employees explicitly choose not to participate. In 2009, we reported that 

the percentage of plan sponsors adopting autoenrollment had grown from 

about 1 percent in 2004 to more than 16 percent in 2009.6 As automatic 

enrollment increases the number of employees participating in a plan, 

plan sponsors are likely to incur greater costs for matching employer 

contributions and for fees paid to plan administrators, and for the 

increased number of disclosures they are required to send to participants.

ERISA requires pension plan sponsors7

 

5 Pub. L. No. 109-280, § 902, 120 Stat. 780, 1033-39. In addition, PPA extended liability 

protections to plans when participants provide plans with no direction about the 

investment of their funds, as may be more apt to happen in cases of autoenrollment. 

§ 624, 120 Stat. 980. 

to disclose certain material, 

including reports, statements, notices, and other documents, to 

participants and other specified individuals. How often plan sponsors 

must send these disclosures can vary depending on several factors, 

including whether the disclosure is routine or nonroutine, the type of plan, 

and the type of information included in the disclosure. Plan sponsors send 

routine disclosures to participants on a quarterly basis, an annual basis, 

6 GAO, Retirement Savings: Automatic Enrollment Shows Promise for Some Workers, but 

Proposals to Broaden Retirement Savings for Other Workers Could Face Challenges, 

GAO-10-31 (Washington, D.C.: Oct. 23, 2009).

7 The plan sponsor is ultimately responsible for ensuring that the plan complies with all 

legal requirements whether it is done directly or through third parties. Therefore, we use 

the term "plan sponsor" broadly throughout this report to refer to plan administrators, 

fiduciaries, or other service providers who may provide reports and disclosures on behalf 

of a plan sponsor.

Participant Disclosures 

Required under ERISA
 

Page 7 GAO-13-594 Electronic Disclosure

or over longer periods, depending on the type of plan and filing 

requirements. A plan sponsor may also be required to send nonroutine 

disclosures when some type of triggering event occurs to the plan or the 

participant’s circumstances change. Routine and nonroutine disclosures 

can contain general information about the plan, or personal information, 

such as a benefit statement or a request for participant action. Table 1 

provides examples of some routine and nonroutine disclosures that 

ERISA requires plan sponsors of DB and DC plans to provide to 

participants.8

Table 1: Examples of Participant Disclosures Required by Law 

Some of these disclosures are under Labor’s purview, while 

others are under Treasury’s. 

Disclosure

Information 

type

Plan types 

affected

Under Labor’s purview

Routine Summary plan description

29 U.S.C. § 1021(a)(1). 

General DBa and DCb

Summary annual report

29 U.S.C. § 1021(b)(1). 

General DC and some 

DB 

Annual funding notice

29 U.S.C. § 1021(f)(1). 

General DB

Participant fee disclosure under ERISA 

404(a) 

29 CFR 2550. 404a-5.

Personal DC

Periodic benefit statement

29 U.S.C. § 1025(a). 

Personal DB and DC

Notice of qualified default investment 

alternative

29 U.S.C. §1104(c)(5)(B). 

General Some DC

Nonroutine Summary of material modifications

29 U.S.C. § 1024(b)(1). 

General DB and DC

Notice of failure to meet minimum funding 

standards

29 U.S.C. § 1021(d). 

General DB and some 

DC

 

8 We are conducting a separate study on the extent of reporting and disclosure 

requirements for private-sector plans, scheduled to be issued later this year.
 

Page 8 GAO-13-594 Electronic Disclosure

Disclosure

Information 

type

Plan types 

affected

Under Treasury’s purview

Routine Notice of intent to use safe-harbor formula

26 U.S.C. § 401(k)(12)(D). 

General Some DC

Notice of qualified automatic contribution 

arrangement

26 U.S.C. § 401(k)(13)(E)(i). 

General Some DC

Nonroutine Notice of significant reduction in future 

benefit accruals

26 U.S.C. § 4980F(e). 

General DB and some 

DC

Suspension of benefits notice 

26 U.S.C. § 418E(e)(1). 

Personal Some DB

Explanation of rollover and certain tax 

options

26 U.S.C. § 402(f). 

Personal DB and DC

Source: GAO analysis of pension disclosure requirements.

Note: Required disclosures can vary significantly in length; for example, they can range from one 

page to several hundred pages.

a

DB = defined benefit plan.

b

DC = defined contribution plan.

Employers’ use of electronic means to deliver information to employees 

has grown as the prevalence of computers and Internet access has 

grown. According to the U.S. Census Current Population Survey, the 

proportion of households that connect to the Internet at home among 

heads of household in all age groups and levels of educational attainment 

has grown over the last decade, including those age 65 or older or with 

less than a high school education (see fig. 2). Nevertheless, significant 

proportions of the workforce and the population continue not to have 

access or participate in mass digital technology. Disparities in household 

access persist based on age and education level, with older and less 

educated heads of household less likely to have Internet access in the 

home, compared with younger and more educated heads of household.

Computer Usage and 

Internet Access
 

Page 9 GAO-13-594 Electronic Disclosure

Figure 2: Rising Percentage of Households That Connect to the Internet at Home, by Age and Educational Attainment of Head 

of Household, 2001-2011

Note: 2005 data on Internet connectivity were unavailable.

In 2010, only about half of the U.S. population had Internet access at 

home and about a quarter had Internet access at work, according to data 

from the most recent panel of the U.S. Census Survey of Income and 

Program Participation.9

 

9 U.S. Census Bureau, Survey of Income and Program Participation, 2008 Panel. (Internet 

release date June 2012)

These data show significant disparities persist 

among individuals based on a variety of characteristics, including income 

level, education level, race and ethnicity. For example, about 58 percent 

of those in the highest income quintile had access to the Internet at work, 

compared with only about 7 percent of those in the lowest quintile. About 

74 percent of individuals with a college degree or higher had Internet 

access at home compared to 33 percent of individuals with less than a 

high-school degree. Similarly, the proportion of non-Hispanic individuals 

with Internet access in the home was more than one-and-one-half the 

access of Hispanic individuals.

http://www.census.gov/hhes/computer/publications/2010.html. 
 

Page 10 GAO-13-594 Electronic Disclosure

A proliferation of electronic devices, including smart phones, tablets, and 

laptop computers all capable of accessing digital networks, websites, and 

information from nearly any location, has made electronic communication 

commonplace in much of the United States. According to recent surveys 

on Internet usage, 56 percent of U.S. adults have a smart phone and 34 

percent have a tablet computer.10

However, the population of adults who do not use the Internet will likely 

continue to decline. Census data show that more than 60 percent of 15-

to-44-year-olds had Internet access in their homes in 2010. A 2013 study 

found that many of the disparities in Internet usage found in the adult 

population (whose reported use of the Internet ranged from 56 to 98 

percent), no longer persisted among teens, with about 90 percent of 

teens in all demographic groups reporting that they use the Internet.

This growth in the use of electronic 

devices and connectivity, however, has not been uniform across all 

segments of the population. A 2010 industry survey also found that 

approximately 20 percent of U.S. adults do not use the Internet at all and 

nearly half of them did not go online because they did not believe the 

Internet was relevant to them. Most of these non-users also reported that 

they had never used the Internet before, and did not have anyone in their 

households who did have access. In addition, 61 percent of these nonusers reported that they would need someone to help them access the 

Internet.

11

(For more detailed data on the characteristics of individuals with and 

without Internet access, see app. I.)

 

10 Pew Research Center Internet & American Life Project, Spring Tracking Survey, April 

17-May 19, 2013, accessed on July 2, 2013, http://www.pewinternet.org/StaticPages/Trend-Data-%28Adults%29/Whos-Online.aspx. It is likely that some of the 

individuals surveyed had multiple devices.

11 Pew Research Center Internet & American Life Project, Teens and Privacy 

Management Survey, July 26-Sept. 30, 2012, accessed on July 2, 2013, 

http://www.pewinternet.org/Static-Pages/Trend-Data-%28Teens%29/Whos-Online.aspx. 

Some of this access may be at school or other location, and may not signify that these 

teens have home or continuous access. However, it does indicate a rapid increase in 

familiarity with electronic communication among this generation. 
 

Page 11 GAO-13-594 Electronic Disclosure

Federal law and regulations allow sponsors of private pension plans to 

furnish all pension disclosures to participants electronically under certain 

circumstances. In some cases, plan sponsors may use electronic delivery 

as their default delivery method as long as the participants receiving the 

disclosures meet specific requirements for accessing information 

electronically. In other cases, plan sponsors must obtain affirmative 

consent from participants before sending disclosures electronically. Plan 

sponsors may also furnish certain disclosures on a plan’s secure 

continuous access website. When the criteria for either default delivery or 

obtaining affirmative consent cannot be met, plan sponsors must mail 

paper disclosures to participants. In addition, federal regulations require 

that participants be allowed to request paper disclosures at any time.

Electronic Delivery 

Allowed for All Plan 

Disclosures under 

Certain 

Circumstances 
 

Page 12 GAO-13-594 Electronic Disclosure

The Electronic Signatures in Global and National Commerce Act (ESIGN)12 provides for the use of electronic disclosure of any information 

that is required to be in writing, as long as certain conditions concerning 

consent are met. Certain provisions under ERISA also explicitly specify 

that sponsors of private pension plans may furnish participant disclosures 

in written, electronic, or other form as long as they are reasonably 

accessible.13 Consistent with these federal laws, regulations pertaining to 

electronic delivery of plan information to participants were issued by 

Labor in 200214 and by Treasury in 2006.15 These regulations expanded 

the scope of electronic delivery to apply to all related ERISA pension plan 

disclosures under the respective purview of each agency and established 

standards and procedures to guide the use of electronic delivery. 

However, the procedures for identifying those participants who qualify for 

default electronic delivery16

 

12 Pub. L. No. 106-229, 114 Stat 464, codified at 15 U.S.C. §§ 7001-7006.

and those who must provide affirmative 

consent for electronic delivery can vary depending on which agency has 

purview over the disclosure, the capacity of the plan sponsor’s electronic 

information system, and the participant’s work environment (see fig. 3).

13 For example, 29 U.S.C. §§ 1021(f)(4)(C) (annual funding notice) and 1025(a)(2)(A)(4) 

(periodic benefit statement).

14 Final Rules Relating to Use of Electronic Communication and Recordkeeping 

Technologies by Employee Pension and Welfare Benefit Plans, 67 Fed. Reg. 17,264 (Apr. 

9, 2002).

15 Use of Electronic Media for Providing Employee Benefit Notices and Making Employee 

Benefit Elections and Consents, 71 Fed. Reg. 61,877 (Oct. 20, 2006).

16 Throughout this report, we use the term “default electronic delivery” to refer to the 

conditions under which plan sponsor may provide notices to participants electronically 

without obtaining participant consent.

Electronic Signatures in Global and 

National Commerce Act (E-SIGN) 

Enacted on June 30, 2000, E-SIGN 

facilitates the use of electronic records and 

signatures in interstate and foreign 

commerce by generally ensuring the 

validity and legal effect of transactions

entered into electronically. To protect

consumers, however, the act provides that 

if a consumer disclosure is required to be 

made in writing, the use of an electronic 

media to deliver it will be valid only if 

detailed conditions are in place to obtain 

the consumer’s informed consent and 

ensure that the consumer knows how to 

also receive the information on paper. For 

example, consumers must be provided 

with clear information about how to 

withdraw their consent as well as the 

hardware and software necessary to 

access and retain the information provided 

electronically. The law also allows federal 

agencies to make exemptions to these 

conditions if it is necessary to eliminate a

substantial burden on electronic 

commerce and does not increase the 

material risk of harm to consumers.

Source: GAO analysis of the E-SIGN statute.

Certain Conditions Must 

Be Met to Implement 

Electronic Delivery
 

Page 13 GAO-13-594 Electronic Disclosure

Figure 3: Procedures for Identifying Participants Who Qualify for Electronic Delivery

Labor and Treasury have structured their regulations quite differently 

regarding their requirements for sending disclosures to certain 

participants electronically without consent. Both agencies require, among 

other things,17 that in order for plan sponsors to use electronic delivery as 

the default delivery method, they must identify participants who can 

effectively access the plan sponsor’s electronic information system, but 

the agencies’ criteria for determining effective access vary. Table 2 

provides examples of how plan sponsors can meet Labor’s and 

Treasury’s different regulatory criteria for default electronic delivery for the 

disclosures under each agency’s purview.

 

17 For example, both agencies require electronic disclosures to include notification of the 

significance of the information provided and that the recipient has a right to request and 

receive the material in paper form. 29 C.F.R. § 2520.104b-1(c)(1)(iii) and 26 C.F.R. §

1.401(a)-21(a)(5)(ii)). 

Electronic Delivery as the 

Default Delivery Method 
 

Page 14 GAO-13-594 Electronic Disclosure

Table 2: Criteria for Allowing Default Electronic Delivery of Disclosures, by Agency

Labor Treasury

Criteria for 

default electronic 

delivery

A plan sponsor can choose to provide required disclosures 

electronically to any participant who meets the following 

criteria:

Participant has ability to effectively access electronic 

documents at any location where he or she can be 

expected to perform his or her duties, including at home

and while on travel.

AND

Participant’s access to the employer’s or plan sponsor’s 

electronic information system is an integral part of his or her 

duties. 29 C.F.R. § 2520.104b-1(c)(2)(i) .

A plan sponsor can choose to provide required 

disclosures electronically to any participant who 

meets the following criteria:

Participant has effective ability to access the 

electronic system used to provide the disclosure.

AND

Participant is advised of his or her right to request 

and receive a paper copy at no charge. 26 C.F.R. § 

1.401(a)-21(c). 

Descriptive 

examples

An employee works at a job that requires regular use of a 

computer to access the employer’s e-mail and other 

electronic systems of the employer to perform his or her 

duties. The employer e-mail system contains a bounce 

back feature. If a document bounces back, the plan sponsor 

follows up to ascertain the problem and if necessary 

provides the document in paper. The plan sponsor CAN 

use the employee’s work e-mail to send ERISA Title I 

disclosures electronically.

An employee separating from employment provides a 

personal e-mail to the employer as part of the employee’s 

forwarding contact information. The employer who sponsors 

a plan CANNOT use this personal e-mail to send notices 

electronically as the default delivery method.

An employee provides a personal e-mail to the employer as 

part of the employee’s emergency contact information. The 

employer who sponsors a plan CANNOT use this personal 

e-mail to send notices electronically as the default delivery 

method.

An employee works at a job that involves use of a 

computer. The employer who sponsors a plan CAN 

use the employee’s work e-mail to send disclosures 

electronically, as long as the employee has the 

effective ability to access the notice, as determined 

based, for example, on the employee’s receipt of the 

electronic disclosure.

An employee separating from employment provides a 

personal e-mail to the employer as part of the 

employee’s forwarding contact information. The 

employer who sponsors a plan CAN use this 

personal e-mail to send notices electronically, as long 

as the employee has the ability to effectively access 

the notice, as determined based, for example, on the 

employee having provided the e-mail address and/or 

receipt of the electronic notice. 

An employee provides a personal e-mail to the 

employer as part of the employee’s emergency 

contact information. The employer who sponsors a 

plan CAN use this personal e-mail to send notices 

electronically, as long as the employee has the ability 

to effectively access the notice, as determined based 

on the employee having provided the e-mail address 

and/or receipt of the electronic notice. 

Source: GAO analysis of Labor and Treasury regulations.

Labor’s notice of final rulemaking indicated that the agency’s regulations 

were designed to be consistent with the goals of E-SIGN and to facilitate 

the voluntary use of electronic records while ensuring continued 

accuracy, integrity, and accessibility of employee benefit plan information 
 

Page 15 GAO-13-594 Electronic Disclosure

and records required to be kept by law.18 Labor’s electronic disclosure 

regulations require pension plan sponsors to take appropriate and 

necessary measures reasonably calculated to ensure that the system for 

furnishing documents results in actual receipt of transmitted information 

and protects personal account and benefit information.19 If the system for 

furnishing documents does not include appropriate and necessary 

measures that are reasonably calculated to ensure actual receipt of 

electronically furnished documents, the plan sponsor must furnish the 

disclosure through a nonelectronic medium, such as paper. These 

regulations establish a safe harbor for plan sponsors to use electronic 

delivery as the default delivery method as long as the employee uses the 

electronic information system as an integral part of their work duties. 

According to Labor, this safe harbor applies to furnishing electronic 

disclosures to actively employed participants, including those who work at 

home or who may be on travel as long as they have “ready access” there 

to the employer’s electronic information system.20

Treasury’s regulations are also designed to comply with the requirements 

of E-SIGN,

In addition, by 

definition, this safe harbor limits use of electronic delivery as the default 

delivery method to actively employed participants only; former 

employees, retirees, and beneficiaries are effectively excluded, and must 

either provide their consent to electronic delivery or receive paper 

disclosures.

21

 

18 67 Fed. Reg. 17,269.

but Treasury’s regulations establish somewhat different 

criteria than Labor for allowing pension plan sponsors to use electronic 

delivery as the default delivery method for participant disclosures under 

Treasury’s purview. Under E-SIGN federal agencies may create 

exemptions to these conditions if it is necessary to eliminate a substantial 

burden on electronic commerce and does not increase the material risk of 

19 29 CFR § 2520.104b–1(c)(1)(i). One method that a plan sponsor could use to ensure 

actual receipt would be the use of an automatic read receipt feature in the e-mail software. 

When the recipient opens the e-mail, an automatic notification would be sent to the plan 

sponsor that the e-mail was received and opened. Another method would be to require all 

undeliverable e-mail messages be returned, or “bounced back,” thereby alerting the plan 

sponsor that the e-mail address that they have for a participant is no longer valid. Still 

another method would be for the administrator to use periodic reviews or surveys to 

confirm that the employer’s e-mail system results in actual receipt.

20 67 Fed. Reg. 17,265.

21 71 Fed. Reg. 61,877.
 

Page 16 GAO-13-594 Electronic Disclosure

harm to consumers.22 In general, a plan sponsor may use default 

electronic delivery to participants who demonstrate an ability to use the 

hardware or software used to provide the disclosure. For example, if a 

participant requested a distribution on a plan’s website after entering 

protected identifying information and an e-mail address to which a 

disclosure was to be sent, a plan sponsor who sent a disclosure via email, and requested and received automatic notification that the 

participant opened the e-mail, would meet the disclosure requirements. 

However, if a plan sponsor sent an e-mail and did not receive a return 

receipt, the plan sponsor could not ensure the disclosure requirements

are being met.

23 In addition, as is the case under Labor’s regulations, 

participants who are defaulted to electronic delivery under Treasury’s 

regulations may request paper copies of any notice sent electronically, 

but they must submit their requests for paper on a document-bydocument basis.24

Labor and Treasury regulations also allow pension plan sponsors to send 

electronic disclosures to other participants who do not qualify for default 

electronic delivery but provide their affirmative consent. Each agency 

established separate criteria for plan sponsors to use to obtain participant 

consent (see table 3).

 

22 § 104(b)(1), 114 Stat. 469 (codified at 15 U.S.C. § 7004(b)(1)).

23 Treasury’s regulations do not include a rule under which an e-mail sent to the last 

known e-mail address would be deemed to have been successfully delivered. 71 Fed. 

Reg. 61, 881.A disclosure that is “provided” in a manner consistent with Treasury’s

electronic delivery requirements will meet a requirement that the disclosure be in writing, 

but merely because it may meet the “in writing” requirement does not mean that the plan 

sponsor met the requirement to provide the notice to the recipient. Treasury officials noted 

that this is important because, for example, a plan sponsor that keeps sending notices to a 

participant’s e-mail address after receiving a notification that the messages are 

undeliverable cannot be said to have met its legal obligation to provide that notice. 

24 26 C.F.R. § 1.401(a)-21(c)(3). 

Obtaining Participant Consent 

for Electronic Delivery 
 

Page 17 GAO-13-594 Electronic Disclosure

Table 3: Criteria for Obtaining Affirmative Consent for Electronic Delivery of Disclosures, by Agency

Labor Treasury

Criteria for 

obtaining 

affirmative 

consent 

A plan sponsor must seek affirmative consent from 

participants before sending any notices electronically.

A plan sponsor delivers to participants an initial notice 

about the documents to which consent would apply, their 

right to withdraw consent at any time and receive paper 

copies, and the procedures for updating their contact 

information. 

Participant provides affirmative consent to receiving 

documents electronically in a manner reasonably 

demonstrating ability to access information in electronic 

form and provides an e-mail address. 

Plan sponsors are only required to reaffirm participant 

consent if they change the information system’s hardware 

or software requirements. 

29 C.F.R. § 2520.104b-1(c)(2)(ii). 

A plan sponsor must seek affirmative consent from 

participants before sending any notices electronically. 

A plan sponsor delivers to participants an initial notice 

about the documents to which consent would apply, their 

right to withdraw consent at any time and receive paper 

copies, and the procedures for updating their contact 

information. 

Participant provides affirmative consent to receiving 

documents electronically in a manner reasonably 

demonstrating the ability to access the electronic system 

used to deliver the notice. For example, once a 

participant accesses the system, the plan sponsor may 

send disclosures electronically. 

Plan sponsors are only required to reaffirm participant 

consent if they change the information system’s 

hardware or software requirements. 

26 C.F.R. § 1.401(a)-21(b)(2)(i). 

Descriptive 

examples 

After delivering to a participant the initial notice, a plan 

sponsor mails or e-mails a notice with instructions on how 

to consent to electronic delivery of plan information. By 

following these instructions, the participant affirmatively 

consents to electronic delivery.

A plan sponsor e-mails a notice containing an attached 

file (e.g., an application, spreadsheet, or web link) that 

will be used to deliver plan information. If a participant 

opens the attachment, selects the consent button, and 

returns the attachment, this constitutes affirmative 

consent to electronic delivery through that electronic 

medium.

A plan sponsor can also mail a paper notice with 

instructions on how to access the electronic medium. If a 

participant successfully accesses the information system

and indicates consent, this constitutes affirmative 

consent to electronic delivery through that electronic 

medium. 

Source: GAO analysis of Labor and Treasury regulations.

Both Labor’s and Treasury’s regulations require plans seeking to obtain 

affirmative consent to provide participants with an initial notice explaining 

certain rights. Among other things, this notice must identify the scope of 

the consent (e.g., whether it applies to one notice or all subsequent 

notices), a participant’s right to withdraw consent at any time, and 
 

Page 18 GAO-13-594 Electronic Disclosure

procedures for withdrawing consent and for updating information needed 

to contact the participant electronically. While Labor’s regulations require 

participants who choose to consent to electronic delivery to provide an email address,25

In 2006, Labor issued general guidance

Treasury regulations do not. Specifically, Treasury’s 

regulations allow plan sponsors to rely on whatever e-mail they may have 

for a participant. If a participant accesses a notice sent to him or her, 

selects a consent button on the notice, and then returns the notice 

through the sponsor’s electronic information system used to deliver this 

notice—that is sufficient to constitute affirmative consent. Under both 

regulations, plan sponsors must develop a process for requesting and 

recording whether consent was obtained from each participant.

26 that addressed the requirement 

for pension plan sponsors to furnish periodic pension benefit statements 

to participants. The Labor guidance included provisions stating that plan 

sponsors wishing to furnish pension benefit statements to participants 

electronically could (1) determine participant eligibility for electronic 

delivery following either the Treasury or Labor rules or (2) make the 

statements available on a secure continuous access website,27

 

25 29 C.F.R. § 2520.104b-1(c)(2)(ii)(B). 

as long as 

the plan sponsor provided certain information to the participant (either 

electronically or by paper) prior to posting the statement online. The 

guidance also stated that a plan sponsor must, in any case, notify 

participants that the statement is available, provide instructions on how to 

access the statement online, and apprise participants of their right to 

request and obtain a paper version of the current statement free of 

charge. To furnish the statements this way, a plan sponsor would need to 

notify participants—either electronically or on paper—that the statement 

is available. Participants would either follow a web link provided in the 

notice or manually access the plan’s website. The participant would be 

prompted to enter a username and password in order to access the 

statements. Participants not wanting to access their statements 

electronically would have to follow instructions on the notice to request a 

paper copy of the current statement, such as by contacting a call center 

after the receipt of a notice.

26 Field Assistance Bulletin 2006-03. 

27 A secure continuous access website is a continuously available website that uses 

authentication and encryption to protect interactions and transactions conducted through 

the Internet. 

Posting to a Secure Website
 

Page 19 GAO-13-594 Electronic Disclosure

When neither the default electronic delivery nor the affirmative consent 

criteria can be met, pension plan sponsors must mail paper disclosures to 

participants. Federal regulations and guidance governing electronic 

delivery underscore the importance of protecting a participant’s right to 

request and receive paper disclosures from their pension plans. When 

promulgating its electronic delivery regulations in 2002, Labor 

acknowledged that electronic disclosures may not accommodate the 

needs of every participant on every occasion for a variety of reasons, 

such as malfunctioning hardware or software, and readability and 

portability. Therefore, preserving participants’ ability to receive paper 

versions of electronically furnished documents is important to ensuring 

adequate disclosure to participants.28 Labor’s and Treasury’s regulations 

both require that all participants receiving notices electronically be notified 

of their right to request documents in paper at any time, and without 

exception, plan sponsors are required to provide participants with paper 

disclosures upon request.

Industry representatives and participant advocates we spoke with agreed 

that the popularity of electronic delivery was growing due to various 

efficiencies—such as reduced costs and better tracking of disclosures—

that can be advantageous for some pension plan sponsors and 

participants.29 However, both groups also raised various concerns with 

the requirements associated with electronic delivery, citing issues with 

their lack of consistency and clarity as well as concerns that they may not 

adequately protect participant choice for those who need or prefer to 

receive paper.

 

28 67 Fed. Reg. 17,267-68.

29 The terms “industry representatives” and “participant advocates” used in this report 

refer only to those industry representatives and participant advocates we interviewed or 

who submitted written comments in response to Labor’s 2011 request for information. 

Because this is a nongeneralizable sample, the views presented here do not represent the 

views of all industry representatives or participant advocates. 

Paper Delivery Required 

for Some Participants

Various Advantages 

and Disadvantages 

Reported Concerning 

the Use of Electronic 

Delivery 
 

Page 20 GAO-13-594 Electronic Disclosure

A major impetus for expanding electronic disclosure is its ability to reduce 

plan sponsors’ costs. Industry representatives and participant advocates 

we spoke with agreed that electronic delivery could reduce plan costs by 

decreasing the amount of paper needed for disclosures, and by rolling 

back the level of printing and mailing required of paper delivery. In its 

2002 regulations, Labor estimated that use of electronic delivery would 

reduce plan sponsors’ printing, materials, and mailing costs associated 

with relevant ERISA disclosures by approximately 14 percent in the first 

year of implementation and result in tens of millions of dollars in annual 

savings in subsequent years.30 One industry representative estimated 

that mailing a one-page document—including the paper, postage, and 

envelope—costs, on average, about 53 cents. In contrast, the average 

estimated cost to send the same document electronically, including the 

posting of the file and issuing an e-mail notifying the individual of the 

document’s availability, was less than 1 cent. One service provider that 

administered accounts for approximately 9 million participants told us that 

it could cost up to $15 to print and deliver a 500-page paper summary 

plan description to each participant. In contrast, sending this disclosure 

electronically to all participants could result in millions of dollars in savings 

in the form of significant reductions in administrative costs for the plan.31

Another advantage of electronic delivery is that pension plan sponsors’ 

information systems have the built-in capacity to track the delivery of 

electronic disclosures. According to industry representatives, plan 

sponsors can track the receipt of electronic notices using the delivery and 

Industry representatives and participant advocates also acknowledged 

that, in addition to cost savings for plans, electronic delivery can result in 

numerous environmental benefits including reductions in the use of 

paper, print products, and fuel used to deliver paper disclosures to 

participants through the U.S. mail.

 

30 67 Fed. Reg. 17,270.

31 Some plan sponsors transfer such cost savings to participants, while others do not. In a 

recent study, we surveyed more than 1,000 401(k) plan sponsors and found that larger 

plans were more likely to pass recordkeeping fees along to participants than were smaller 

plans, but that larger plans’ typically paid lower fees than small plans. See GAO, 401(K) 

Plans: Increased Educational Outreach and Broader Oversight May Help Reduce Plan 

Fees, GAO-12-325 (Washington, D.C.: Apr. 24, 2012). 

Reported Advantages of 

Electronic Delivery

Reduced Costs

Built-in Tracking
 

Page 21 GAO-13-594 Electronic Disclosure

read receipt functions of their existing e-mail systems.32 For example, 

they said that some plan sponsors track and monitor the extent to which 

they successfully deliver electronic notices to participants and can 

monitor how many participants access the plan’s website after opening 

and reading an e-mail notification. Tracking the receipt of e-mail notices 

allows plan sponsors to confirm whether a participant received the e-mail. 

If an e-mail bounces back as undeliverable, one service provider told us 

that this activates automatic paper delivery as a safety net and sends a 

paper notice to the participant’s last known address. Plan sponsors can 

also use existing systems to monitor more participant responses to 

certain disclosures better than is possible using paper delivery. For 

example, plan sponsors can track the rate at which participants use web 

links embedded in their electronic disclosures to access their online 

pension accounts or available online retirement management tools. 

Although such tracking capability exists, plan sponsors are not required to 

use this capability to ensure that participants open disclosures sent 

electronically.33

One further advantage of electronic delivery is that it offers participants 

who receive electronic disclosures improved access to their most current 

retirement information and better archiving capability, according to both 

industry representatives and participant advocates. For example, 

electronic delivery can provide participants with greater access to their 

retirement information since it is always available on the plan sponsor’s 

Industry representatives said that such a requirement 

would require plan sponsors using electronic delivery to incur the costs of 

taking the additional steps of tracking and documenting receipt for 

electronic delivery—steps that are not required for plan sponsors using 

paper delivery. Moreover, they noted that tracking the receipt of notices 

sent electronically cannot ensure that a participant actually reads the 

notice. Participant advocates suggested that the costs incurred by plan 

sponsors would be minimal and a requirement that plan sponsors use 

existing technology and e-mail systems to track which documents were 

opened would provide some assurance of actual receipt.

 

32 One service provider reported that Microsoft Outlook includes a delivery receipt function 

in its e-mail application, but that many other e-mail platforms (e.g., Apple) do not include a 

delivery receipt function. In addition, this service provider found that often employer e-mail 

addresses for participants are more prone to non-delivery than personal e-mail addresses. 

33 Labor regulations provide several examples of appropriate measures that are 

reasonably calculated to ensure that the system results in actual receipt of transmitted 

information, such as using return-receipt or notice of undelivered electronic mail features, 

or conducting periodic reviews or surveys. 29 C.F.R. § 2520.104b-1(c)(1)(i)(A). 

Improved Access and Archiving
 

Page 22 GAO-13-594 Electronic Disclosure

website or electronic archive. Participants can also access the information 

from any location with a working Internet connection and archive 

disclosures more efficiently. For example, participants can download 

disclosures to their electronic devices in Portable Document Format 

(PDF) for electronic filing at any time and from any location. Industry 

representatives reported that some plan sponsors provide participants 

with secure online storage accounts where they can archive disclosures. 

Industry representatives also reported that electronic delivery offers other 

efficiencies related to access, such as improved delivery times for 

disclosures and greater accuracy and timeliness of retirement information 

provided on account statements and plan documents. For example, plan 

sponsors who use electronic delivery can provide nearly real-time 

retirement information and account balances on a participant’s statement, 

and can include the most up-to-date provisions in the summary plan 

description posted to the plan’s website or as a PDF file attached to an email. Participant advocates supported the concept of an online electronic 

archive that contained all plan notices so that participants could easily 

locate the information they needed when they needed it.

Electronic delivery offers participants a choice of delivery methods and 

aligns with the needs of a growing sector of the population, according to 

both industry representatives and participant advocates we interviewed. 

Participant advocates acknowledged that there are situations, such as in 

industries that employ a young professional workforce, in which electronic 

delivery is preferable to plans and participants, especially when a 

participant has elected to receive information electronically. One large 

service provider who monitors participant delivery preferences told us that 

the proportion of participants communicating electronically with the firm 

had grown in the past several years from about 40 percent to about 60 

percent, and that 91 percent of its DC plan participants conducted 

transactions using the Internet compared to 9 percent who conducted 

transactions over the telephone. In 2012, another large service provider 

who administered accounts for approximately 20 million participants 

reported that 60 percent of participants in plans with paper as the default 

delivery method opted to receive their statements electronically. Another 

service provider reported that, among participants in smaller plans, the 

number of participants opting into electronic delivery had increased 

significantly in the last 3 years, from just under 22,500 participants in 

Increased Participant Choice of

Electronic Communication
 

Page 23 GAO-13-594 Electronic Disclosure

2010 to nearly 140,000 participants in 2012, with 46 percent of its total 

participants opting to receive statements electronically.34

According to some industry representatives, more plan sponsors—both 

large and small—would like to take advantage of efficiencies associated 

with electronic disclosure, but given the complexity of the requirements 

for default electronic disclosure, they are fearful of misinterpreting some 

aspect of these criteria or being found in noncompliance. In particular, 

they told us that they find the criteria for meeting Labor’s “integral part of 

duties” safe harbor threshold especially challenging, especially with 

respect to how these criteria apply to employees who perform their duties 

at a field location. They noted that while these employees may have 

ready access to the plan sponsor’s information system, the extent to 

which an employee must regularly access the employer’s electronic 

information system to qualify for the safe harbor is unclear. Without 

specific standards that clearly describe the requirements for these kinds 

of scenarios, industry representatives told us that some plan sponsors 

were reluctant to use electronic delivery as the default delivery method, 

opting instead to reduce their risk of noncompliance either by seeking 

affirmative consent from their employees for electronic disclosure or by 

providing only paper disclosures. In contrast, participant advocates did 

not agree with the industry representatives’ point of view. They told us 

that when compared to Treasury’s criteria for default delivery, in their 

view, Labor’s integral part of duties safe harbor requirements struck a 

good balance between protecting a participant’s rights to paper 

disclosures and permitting plan sponsors to use electronic delivery.

Further, industry representatives told us that in general the criteria can be 

cumbersome to apply. For example, one plan sponsor told us that 

 

34 Another service provider reported that in 2012, 18 percent of their DC plan participants 

who had the ability to opt-in to electronic delivery did so and 3 percent of those 

participants already receiving disclosures electronically opted for paper delivery. 

Reported 

Disadvantages of 

Electronic Delivery 

Requirements 

Default Criteria Too Complex
 

Page 24 GAO-13-594 Electronic Disclosure

although the company’s workforce was highly technical and therefore 

more likely than not to use the plan sponsor’s information system to 

conduct an integral part of their duties, there were exceptions. As a result, 

the plan sponsor had to conduct a thorough review of all business 

operations and employee classifications, and monitor its workforce’s 

access to computers on an ongoing basis as businesses opened or 

closed. If there were any doubt as to an employee’s qualifications for 

default electronic delivery, the plan sponsor would exclude that employee 

from automatic e-disclosure and default to paper delivery.35

To realize the efficiencies of electronic delivery as use of electronic 

communication grows, industry representatives told us that many plan 

sponsors would like to use electronic delivery as their default delivery 

method for all disclosures for any participants whose working e-mail 

address was on file, with an opt-out provision for those that prefer paper. 

Labor officials, however, questioned whether the pension marketplace 

should be setting the precedent in moving to electronic default notification 

systems. They noted that banks, insurance companies, and mutual fund 

companies are not establishing electronic default notification systems for 

their customers, but instead are allowing customers to opt into electronic 

delivery if they choose. Participant advocates we spoke with did not 

support efforts to make electronic delivery the default method for all 

Industry 

representatives also told us that plan sponsors were hesitant to attempt 

default electronic delivery for disclosures under Labor’s purview because 

the requirements lack clarity as to how the “integral part of duties” safe 

harbor applies to nonstandard work situations. For example, as noted 

earlier, some plan sponsors may have many employees who work 

outside the office and use their personal computer once a day to access 

the plan sponsor’s electronic information system to check their schedule, 

input orders, and review e-mail. Industry representatives told us that they 

thought this level of computer use is integral for these employees to 

successfully carry out their duties and it likely met the safe harbor 

threshold, but a number of plan sponsors were reportedly reluctant to use 

default delivery in such cases because it was unclear whether this met 

Labor’s threshold.

 

35 Industry representatives also reported that for participants who do not meet the integral 

part of duties safe harbor, participant inertia may contribute to plan sponsors’ difficulty with 

obtaining affirmative consent for electronic disclosure. However, without confirmation from 

the participants as to why they did not respond, there is no way to determine whether a 

participant’s inaction resulted from a conscious choice or was the result of participant 

inertia. 
 

Page 25 GAO-13-594 Electronic Disclosure

disclosures sent to all participants, saying that such a move would likely 

deny access to plan information for significant numbers of participants 

who did not have Internet access.

According to industry representatives, the regulatory requirements for 

furnishing disclosures on a plan’s secure continuous access website are 

too restrictive in that only two disclosures qualify. Plan sponsors told us 

that they would like to use this medium to furnish other required 

disclosures and plan information. 36

Several participant advocates expressed concerns that the Treasury’s 

rules for default electronic delivery do not adequately safeguard a 

participant’s ability to choose to receive paper disclosures. Specifically, 

they were concerned that these requirements give pension plan sponsors 

too much discretion to determine whether participants have the effective 

ability to access the plan sponsor’s electronic system and receive 

disclosures electronically. According to participant advocates, the lack of 

an affirmative consent requirement for these disclosures could prove 

problematic for participants who may inadvertently have demonstrated 

their effective ability to access electronic communication at some point in 

the past and may be unaware that plan sponsors are sending electronic 

notices to an old or unused e-mail address. In these situations, plan 

sponsors would only know that the disclosure was not reaching the 

participant if the e-mail bounced back as undeliverable.

Specifically, they noted that allowing 

plan sponsors to expand the use of their websites to furnish disclosures 

that contain general plan information, such as a summary annual report, 

would significantly reduce plan administrative costs. In contrast, the 

participant advocates we spoke with had mixed views on this idea. Some 

agreed with the industry representatives, noting that it made sense to 

allow plan sponsors to furnish certain general information disclosures on 

a plan sponsor’s website. However, others disagreed, saying that a 

secure website, unlike paper, could not ensure that all participants could 

access plan information.

Several participant advocates also expressed concern that over the 

course of a career some participants who affirmatively consented to 

electronic delivery may forget the choice they made, resulting in failure to 

 

36 Field Assistance Bulletin 2006-03. 

Use of Website Too Restrictive 

Inadequate Participant 

Protections
 

Page 26 GAO-13-594 Electronic Disclosure

receive key retirement disclosures.37 This can be especially problematic 

for spouses and beneficiaries after a participant’s death. According to 

participant advocates, spouses and beneficiaries may not even know that 

a deceased participant earned a benefit or provided affirmative consent to 

receive disclosures electronically. For example, officials at one service 

provider told us that they would continue to send disclosures 

electronically to an e-mail address after the participant has separated 

from employment or retired, if they had a working e-mail address on file.38

Industry representatives and participant advocates alike stressed the 

importance of safeguarding participant choice of delivery method to 

ensure that all participants with a retirement account can access plan 

information. To accomplish this, they noted that paper delivery would 

remain necessary for some time. While national data on participant 

preferences for how plans communicate plan information are limited, a 

2012 survey of a national sample of participants found that a majority of 

participants at all ages preferred to receive plan information on paper.

In such a situation, spouses and beneficiaries could potentially lose 

connection to their benefit after the participant’s death unless they were 

aware of the participant’s personal e-mail account and knew how to 

access it.

39

 

37 Electronic delivery may have greater implications for participants who are automatically 

enrolled in a plan. As we have reported in the past, these participants may tend to engage 

less with their plans. See GAO, Retirement Savings: Automatic Enrollment Shows 

Promise for Some Workers, but Proposals to Broaden Retirement Savings for Other 

Workers Could Face Challenges,

At the same time, both industry representatives and participant advocates 

acknowledged that choice applies to both paper and electronic delivery 

GAO-10-31 (Washington, D.C.: Oct. 23, 2009). 

38 Several service providers told us that they gather participants’ personal e-mail 

addresses when they access the plan website for the first time and voluntarily provide 

their e-mail address as a condition of affirmatively consenting electronic delivery. In

addition, they said they relied on plan sponsors to send work e-mail addresses of 

participants who qualified under Labor’s integral part of duties safe harbor. One service 

provider told us that all active employees and participants were asked to provide both 

work and personal e-mail addresses. 

39 AARP, Paper by Choice: People of all Ages Prefer to Receive Retirement Information 

on Paper, (Washington D.C.: November 2012). According to AARP, the survey was 

conducted via telephone omnibus by an independent research company from October 10-

October 21, 2012, among a sample of 1,028 respondents ages 25 and older who are 

currently participating or have ever participated in a retirement savings plan, such as a 

401(k) or pension plan. The reported margin of error for total respondents was +/- 3.06 

percent at the 95-percent confidence interval.
 

Page 27 GAO-13-594 Electronic Disclosure

methods and that each delivery method has a range of pros and cons that 

may be weighed differently by different participants (see fig. 4). 

Figure 4: Pros and Cons That May Affect a Participant’s Choice of Delivery Method for Pension Disclosures

a

Pension plan sponsors also employ additional countermeasures to protect participant information 

online by using encryption software and firewalls to increase the security of plan websites, and in 

some cases, by requiring participants to answer security questions or to validate their computer’s 

Internet protocol address before allowing access to online retirement accounts.
 

Page 28 GAO-13-594 Electronic Disclosure

b

We recently reported that federal agencies have seen increasing numbers of cybersecurity incidents 

that have placed sensitive information at risk, with potentially serious impacts on federal and military 

operations; critical infrastructure; and the confidentiality, integrity, and availability of sensitive 

government, private sector, and personal information. The increasing risks are demonstrated by the 

dramatic increase in reports of security incidents, the ease of obtaining and using hacking tools, and 

steady advances in the sophistication and effectiveness of attack technology. See GAO, 

Cybersecurity: National Strategy, Roles, and Responsibilities Need to Be Better Defined and More 

Effectively Implemented, GAO-13-187 (Washington, D.C.: Feb. 14, 2013). In addition, the Federal 

Trade Commission has reported that consumer complaints about identify theft were the most frequent 

form of complaint filed in 2012, accounting for 18 percent of all consumer complaints filed that year. 

Individuals age 50 or older filed just over a third of these complaints (98,100). Consumers also 

reported that e-mail was the most common method of contact used to initiate fraud.

c

The Department of Justice has described phishing as luring techniques that identity thieves use to 

fish for personal information of unsuspecting Internet users to perpetrate fraud. Phishing often 

involves the use of deceptive websites or e-mail to trick Internet users into disclosing their bank and 

financial information or other personal data such as usernames and passwords. It is estimated 

phishing attacks have resulted in global losses of billions of dollars.

As the popularity of electronic communication grows, the demand for 

electronic disclosures will also grow. Facilitating electronic delivery to 

meet future growing demand also serves to safeguard participant choice 

for those participants who prefer electronic communication but currently 

cannot exercise this preference.40

Our examination of the regulations and guidance related to the concerns 

raised by industry representatives and participant groups identified 

several weaknesses in the agencies’ requirements related to electronic 

disclosure. For example, we found the requirements describing which 

participants qualify for electronic delivery to be somewhat inconsistent 

and unclear, especially with respect to requirements for default electronic 

delivery and obtaining affirmative consent. In addition, we found that the 

requirements permitting default electronic delivery to furnish disclosures 

may not fully protect participants’ ability to choose a preferred delivery 

method or revisit this choice when their circumstances change.

 

40 Currently, a participant’s ability to choose electronic delivery is not universal. According 

to one industry representative, many smaller employers—defined as for-profit companies 

that employ 100 or fewer employees—do not offer electronic delivery because they do not 

have an e-mail system for delivery of personnel information and the establishment of an 

electronic infrastructure is prohibitively expensive. Industry representatives also believed 

that some small plan sponsors may shy away from offering electronic delivery because of 

the complex rules involved.

Certain Electronic 

Disclosure 

Requirements Are 

Somewhat 

Inconsistent and 

Unclear, and May Not 

Fully Protect 

Participant Choice
 

Page 29 GAO-13-594 Electronic Disclosure

Federal agencies are to draft regulations that are easy to understand with 

the goal of minimizing the potential for uncertainty and avoid regulations 

that are inconsistent or incompatible with regulations of other agencies.41

Labor’s and Treasury’s regulations governing electronic disclosure set 

different standards for plan sponsors to follow for using default electronic 

delivery. Specifically, to ensure compliance with Treasury’s requirements 

for default electronic delivery, plan sponsors need to monitor participants’ 

ability to access the electronic information system. On the other hand, to 

ensure compliance with Labor’s default disclosure requirements, plan 

sponsors need to monitor changes in the work status and computer 

access of their active employees to ensure that employees continue to 

meet these regulatory criteria of (1) having the effective ability to access 

their employer’s information system; (2) using this system as an integral 

part of their duties; and (3) conducting their work from a worksite with 

ready access to the system. If an employee’s work status changed and 

no longer met the Labor threshold, the plan sponsor would need to 

discontinue default electronic delivery to this participant. These regulatory 

schemes are not necessarily incompatible; plan sponsors could 

simultaneously comply with both. The fact that the requirements are 

different could mean that some sponsors would need to develop different 

compliance strategies for each.

Our analysis of the regulations governing the use of electronic disclosure 

found, as was indicated in our interviews with industry representatives, 

that the regulatory requirements for determining which participants qualify 

for default electronic delivery are somewhat lacking in consistency and 

clarity.

This issue becomes of particular concern in nonstandard work situations 

where employees may not have ready access to their computers. Our 

analysis of the Labor requirements found that while they do offer some 

flexibility with regard to alternative worksites, they could be clearer about 

the thresholds qualifying employees must meet. Specifically, Labor’s 

regulations describe an employee’s worksite as “any location where a 

participant is reasonably expected to perform his or her duties as an 

employee,”42

 

41 See Exec. Order No. 12,866, 58 Fed. Reg. 51,735 (Oct. 4, 1993) and Exec. Order No. 

13,563 (reaffirming and supplementing Exec. Order No. 12,866).

and this description includes “employees who work at home 

or who may be on travel, provided they have ready access to the 

42 29 C.F.R. § 2520.104b-1(c)(2)(i)(A). 

Requirements for Default 

Electronic Delivery Are 

Somewhat Inconsistent 

and Unclear
 

Page 30 GAO-13-594 Electronic Disclosure

employer’s information system.”43

ERISA’s overall reporting and disclosure framework is intended to assure, 

among other things, that participants in private pension plans are 

provided or have access to sufficient information to protect their rights 

and benefits under the plans. To help assure sufficient access, both 

Labor’s and Treasury’s regulations safeguard participant choice in how 

disclosures are delivered by requiring plan sponsors to send paper 

documents to participants upon request. However, in light of participant 

concerns in this area, we examined the regulations related to participant 

choice and identified certain weaknesses in the current regulatory 

structure. Specifically, we found that participants are not allowed to easily 

opt out of all default electronic delivery entirely, but must request paper 

on a document-by-document basis. We also found that participants are 

afforded limited opportunities to revisit participant consent. While neither

of these weaknesses represents a failure to protect participant choice, as 

participants have the right to request paper copies of disclosures at any 

time, strengthening the regulatory structure in these areas could better 

ensure that participants receive information in a timely way by their 

preferred delivery method.

Labor officials told us that employees 

who worked in the field (such as salespeople, delivery workers, or 

telecommuters) would likely meet the safe harbor criteria because the 

actual location of an employee’s work was less important than the 

expectation that an employee would have ready access to the employer’s 

electronic information system and would likely receive timely notice of any 

disclosures. However, we found that the regulations do not contain this 

level of specification or provide clear examples of how plan sponsors can 

determine whether an employee meets the “integral part of duties” 

threshold of having ready access to the employer’s electronic information 

system. 

Neither Labor’s nor Treasury’s requirements for permitting default 

electronic delivery include provisions that give participants the choice of 

opting out of all electronic disclosures entirely. Although some plan 

sponsors may make such an option available, they are not required to do 

so. As mentioned earlier in this report, both Labor’s and Treasury’s 

regulations44

 

43 67 Fed. Reg. 17,265.

require plan sponsors to make paper versions of 

44 29 C.F.R. § 2520.104b-1(c)(1)(iv) [Labor]; 26 C.F.R. § 1.401(a)-21(c)(3) [Treasury]. 

Certain Requirements May 

Not Fully Protect 

Participant Choice

No Opportunity to Opt Out of 

Default Electronic Delivery 
 

Page 31 GAO-13-594 Electronic Disclosure

electronically furnished documents available to participants and

beneficiaries upon request. However, Labor and Treasury officials 

confirmed that under these provisions, in situations where plan sponsors 

do not allow participants to opt out of electronic delivery entirely, 

participants wanting paper documents can only request a paper copy of a 

disclosure on a document-by-document basis, which is more tedious and 

time-consuming for both participants and plans sponsors than an 

arrangement that would permit participants to exercise the choice to opt 

out of electronic disclosures entirely.45

We also found that Labor’s 2006 general guidance requires plan 

sponsors to apprise participants of their right to request and obtain a 

paper version of their current benefit statement free of charge, but does 

not require them to allow participants to opt out entirely of receiving their 

statements electronically in this manner.46

Our analysis also found that under the current requirements for electronic 

disclosure, plan sponsors are required to notify participants of their rights 

to withdraw consent for electronic delivery, but they are not required to 

revisit participant consent for electronic delivery except under limited 

circumstances. Specifically, both Labor’s and Treasury’s regulations 

require plan sponsors, prior to obtaining participant consent, to notify 

participants of their right to withdraw their consent for electronic delivery 

at any time. However, the regulations do not require plan sponsors to 

remind participants of this right, or to reconfirm participants’ preferences,

except under certain, limited circumstances, such as when plan sponsors 

make a change to their hardware or software that could affect 

Therefore, participants wanting 

paper copies of their quarterly benefit statement or quarterly fee 

information would need to request a paper copy from the plan each time a 

new statement became available on the plan’s website. In these 

situations, participants would have no ability to change their preferred 

delivery method for how they wished to receive information about their 

retirement accounts on an ongoing basis.

 

45 Several participant advocacy groups also noted that reducing the barriers to requesting 

paper disclosures would further strengthen participant safeguards. One group, for 

example, suggested that plan sponsors be prohibited from requiring participants to follow 

unduly burdensome procedures, such as having to write a letter, in order to register their 

preference for paper disclosures.

46 Field Assistance Bulletin 2006-03. 

Few Opportunities to Revisit 

Consent
 

Page 32 GAO-13-594 Electronic Disclosure

participants’ access.47 Having requirements that sponsors provide such 

reminders would help ensure that participants, who may prefer paper 

disclosures or who do not have the proper hardware or software to 

receive electronic disclosures, have the opportunity to register a 

preference in how they wish to receive plan information.

The ultimate purpose of the ERISA disclosure requirements is to ensure 

that participants can access information about their pension plans when 

they need it in order to help them make informed decisions about their 

retirement. To this end, efforts to facilitate the broader use of electronic 

delivery must be accompanied by efforts to safeguard participants’ right to 

receive paper disclosures, if they so choose.

Much has changed in the workplace since Labor and Treasury issued 

their respective final electronic disclosure regulations. Advances in 

technology in the areas of digital communication, and widespread use of 

the Internet at work and at home have redefined the workplace. In 

addition, the broad adoption of new technologies, such as remote access 

and secure continuous access websites, has made it possible for 

employees to conduct their work and access information any time from 

any location with Internet access. Yet the regulatory requirements for 

determining which participants qualify for default electronic delivery are 

somewhat inconsistent and unclear, leaving some plan sponsors 

uncertain as to how to apply the requirements to their participants. In 

addition, participants defaulted into electronic delivery may have few 

opportunities to express their preferences for how they receive plan 

information, increasing the risk that they will not get information in a way 

that best serves their needs.

The transition underway towards greater use of electronic disclosure has 

the potential to achieve benefits for plan sponsors and participants in the 

form of reduced costs and greater access. At the same time, paper 

disclosures continue to play an important role in meeting the needs of 

 

47 Industry representatives told us that plan sponsors often include statements on 

electronic disclosures reminding participants of their right to change their delivery 

preference and method for accessing disclosures; however, they are not required to do 

so, except with respect to the fee disclosure notice. Although Labor requires plan 

sponsors that do not use the safe harbor under 29 C.F.R. § 2520.104b-1(c) to notify 

participants annually of their delivery choice for receiving fee disclosures with instructions 

on how participants can change their preference, the requirement does not apply to any 

other required ERISA disclosures under Labor’s purview. Technical Release 2011-03R. 

Conclusions 
 

Page 33 GAO-13-594 Electronic Disclosure

those not connected to the Internet or who prefer paper, and in helping 

locate participants when e-mail communications are returned as 

undeliverable. For these reasons, it is essential that plan sponsors 

maintain the capacity to provide paper disclosures even if the bulk of their 

disclosures move to electronic format over time, and that a participant’s 

right to choose to receive paper disclosures is strengthened and 

protected. 

We recommend that the Secretary of Labor and the Secretary of the 

Treasury take the following three actions:

1. Work together to develop clear and consistent requirements for 

default electronic delivery of pension-related disclosures.

2. Consider requiring pension plan sponsors to provide participants with 

an opportunity to opt out of all forms of electronic delivery, including 

(but not limited to) disclosures sent by default electronic delivery and 

disclosures posted on a secure continuous access website.

3. Consider requiring pension plan sponsors to send a periodic paper 

notice to participants reminding them of their right to change their 

preferred delivery method at any time and the steps they must take to 

make these changes.

We provided a draft of this report to Labor, Treasury, and the Pension 

Benefit Guaranty Corporation for review. Only Labor provided formal 

written comments, which are reproduced in appendix II. Labor generally 

agreed with our findings and recommendations. In its comments, Labor 

emphasized its view that employees are in the best position to determine 

the method of delivery that is most effective in communicating plan 

information to them. Moreover, Labor said that it would continue to seek 

to foster delivery systems that both protect a participant’s right to get 

required information while offering plans flexibility to use electronic 

disclosure to achieve efficiencies. In addition, all three agencies provided 

technical comments, which we incorporated in the report, as appropriate.

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
 

Page 34 GAO-13-594 Electronic Disclosure

As arranged with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days from the 

date of this letter. At that time, we will send copies to the Secretary of 

Labor, Secretary of the Treasury, and Director of the Pension Benefit 

Guaranty Corporation. In addition, the report will be available at no 

charge on the GAO website at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

me at (202) 512-7215. Contact points for our Office of Congressional 

Relations and Office of Public Affairs can be found on the last page of this 

report. GAO staff making major contributions to this report are listed in 

appendix III. 

Charles A. Jeszeck, Director

Education, Workforce, and

Income Security Issues
Appendix I: Internet Access for Individuals Age 

15 and Older, by Selected Characteristics 

(2010)

Page 35 GAO-13-594 Electronic Disclosure

Appendix I: Internet Access for Individuals 

Age 15 and Older, by Selected Characteristics 

(2010)
Appendix II: Comments from the Department 

of Labor

Page 36 GAO-13-594 Electronic Disclosure

Appendix II: Comments from the Department 

of Labor
Appendix II: Comments from the Department 

of Labor

Page 37 GAO-13-594 Electronic Disclosure
Appendix II: Comments from the Department 

of Labor

Page 38 GAO-13-594 Electronic Disclosure
Appendix II: Comments from the Department 

of Labor

Page 39 GAO-13-594 Electronic Disclosure
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 40 GAO-13-594 Electronic Disclosure

Charles A. Jeszeck, (202) 512-7215 or jeszeckc@gao.gov

In addition to the contact named above, Margie K. Shields, Assistant 

Director; Ted Burik; and Jonathan S. McMurray made key contributions to 

this report. James Bennett, Amy Buck, Holly Dye, Kathy Leslie, Walter 

Vance, Craig Winslow, and Jeff Woodward also provided support.

Appendix III: GAO Contact and Staff 

Acknowledgments 

GAO Contact:

Staff 

Acknowledgments 

(131206)
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