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ERISA Meets the Computer Age (Finally!)


The Employment and Labor Law Alert

May 1, 2002

Administrators of employee pension and welfare benefit plans can look forward to a somewhat lightened burden in complying with their disclosure requirements under the Employee Retirement Income Security Act (“ERISA”). In April, 2002, the Labor Department released rules, effective October 7, 2002, permitting employee pension and welfare benefit plans to use electronic media to communicate plan information to participants and beneficiaries. 29 CFR Part 2520. Previously, ERISA regulations had only limited provisions for electronic disclosure of information. The new rules permit both disclosure and the maintenance and retention of records via electronic technology, subject to certain restrictions and requirements.

Under ERISA’s regulatory disclosure requirement – either in compliance with direct mandates of the statute or in response to individual requests, administrators of employee benefit plans “must disclose certain material, including reports, statements, notices, and other documents.” The new rules explicitly recognize that electronic recordkeeping and communications are replacing paper records and documents. The plan administrator furnishing documents through electronic media does, however, have an obligation to ensure that it has used “measures reasonably calculated to ensure actual receipt of material,” which may include utilization of “return-receipt” or “undeliverable” electronic mail features, or periodic reviews or surveys regarding receipt of information. Confidentiality of personal information contained in any document furnished electronically is also mandated. The regulations have more specific requirements regarding those persons for whom electronic media disclosure is permissible, but in general impose the burden on plan administrators to make sure that the persons to whom disclosure is required, or who have asked for certain information, actually receive the pertinent documents or materials.

In conjunction with the electronic disclosure, plan documents may now be permanently maintained via electronic media. In accordance with the mandates of reasonable controls to ensure the integrity, accuracy and availability for inspection or examination, once a compliant electronic recordkeeping system is established, original paper records may be disposed of. The consolidation of records and disclosure to electronic form will, after the initial transfer to electronic media and implementation of appropriate compliance processes, ease the administrator’s burden in providing information, and produce economic benefits in reducing the costs of reproducing and mailing disclosure materials. However, to ensure that your plan has complied with the detailed regulations, before implementing a paperless ERISA plan, consultation with your attorney is recommended.