SPARK Finds E-Delivery of Retirement Plan Communications Could Improve Retirement Readiness

It found cost savings would accrue to plan participants in the form of lower fees and greater investment growth over time, improving retirement security by up to 9%.

Electronic delivery for retirement plan communications could save participants up to $450 million a year, according to the SPARK Institute. Over the course of their savings lives, this could boost participants’ returns by 9%, the Institute adds.

“This latest research significantly endorses the Department of Labor’s (DOL’s) electronic delivery proposal and the undeniable benefits for the nation’s retirement savers,” says Tim Rouse, executive director of the SPARK Institute. “It clearly demonstrates improved retirement outcomes with electronic delivery and online access that can reduce costs and increase savings for the average retiree by 9% over the accumulation period.”

SPARK performed a projection and found cost savings would accrue to the plan participant in the form of lower fees and greater investment growth over time. Annual savings would range between $250 million to $450 million a year, improving retirement security by up to 9% during the accumulation phase.

The SPARK Institute says 99% of retirement plan participants have access to the Internet, and 88% use the Internet on a daily basis. Final account balances could increase by 63% due to e-delivery nudges to participants to increase their deferral rates. “Under conservative assumptions, a 35-year-old worker who is defaulted into electronic delivery—in addition to engaging with online tools and educational resources—could gain 149% more in retirement savings,” SPARK’s research report says.

The Institute says e-delivery provides a better guaranteed of actual receipt of information and strengthens cybersecurity to prevent online account fraud. It concludes that electronic delivery of retirement plan information provides an efficient, secure and reliable means of communicating important plan information.

The SPARK Institute recently wrote to the DOL strongly supporting e-delivery of retirement plan information. The retirement plan industry has reacted positively to the DOL proposal to make default e-delivery of plan documents the norm, but their comment letters also include additional ideas to make the new rules even more effective.