Paperless proposals are threatening financial literacy and access to government services.
Learn more about each issue below:
Loss of Paper-Based Retirement Planning
The Department of Labor proposed a new rule to switch all workers and their families to electronic delivery of retirement planning information. The Department of Labor's plans will affect everyone, no matter their level of Internet access, comfort with technology or personal preferences.
Surveys by AARP, Consumer Action, FINRA, the SEC and more show that people prefer receiving financial information in paper form. Not to mention the 25 percent of Americans who still lack regular Internet access.
In addition, The RETIRE ACT (or the "Receiving Electronic Statements to Improve Retiree Earnings Act") is a federal proposal allowing employers and other retirement plan advisors to automatically default participants into receiving plan documents and statements online.
The RETIRE Act would make e-delivery the default for ALL workers and their families, no matter their level of Internet access, comfort with technology or personal preferences. It sets a bad precedent giving retirement plan sponsors undue power over American workers, while also exposing workers least equipped to handle it to electronic phishing scams aimed at stealing personal information.
Disclosure of retirement plan information is a key consumer protection. While paper statements are the current default, all workers are free to request e-delivery of important retirement plan information. They should not be forced into it.
Social Security Earnings Statements
Without public comment or input from Congress, the Social Security Administration suspended the mailing of Social Security earnings statements in January 2017 to workers under the age of 60. Social Security earnings statements are essential to most American workers. Verifying your recorded earnings and calculating your retirement date are two critical financial decisions all wage-earners need to make.
As reported by The New York Times and Reuters, an Inspector General report released in 2019 revealed that there are only 38.8 million registered users of the online portal, “My Social Security" (the only method to access earnings statements). That’s less than 25 percent of wage-earners – and only half of those people have accessed My Social Security since 2012.
Social Security earnings statements are the only retirement-planning tool available to many Americans. It’s clear that the government needs to reinstate the mailing of Social Security earnings statements to be fair to the American people and to comply with what the Social Security Act (Section 1143) requires.
Fortunately, the Know Your Social Security (KYSS) Act, new bipartisan legislation, would require the Social Security Administration to reinstate the mailing of annual Statement of Earnings until a wage earner accesses their account through the my Social Security online portal.
SEC Shareholder Reports
For over a decade, investors have had the option to choose e-delivery of shareholder reports, but many still prefer to receive them by mail. Yet Rule 30e-3, adopted in 2018 by the Securities and Exchange Commission (SEC), switched the default distribution method for annual and semi-annual mutual fund performance reports from mail to electronic delivery.
More than 90 percent of the comments submitted to the SEC opposed Rule 30e-3. Despite the concerns raised, which included lack of access to the Internet by vulnerable populations, exposure to online fraud and difficulty reading reports on mobile devices, the SEC passed its proposal behind closed doors.
SEC Rule30e-3 is currently being contested in federal court by the Coalition for Paper Options and others.
Tax Forms & Instructions
The Internal Revenue Service (IRS) no longer provides a paper version of Publication 17, the Tax Guide for Individuals. The IRS is neither offering the income tax instruction booklet to individual filers, nor is it equipping libraries or post offices with the booklet for distribution, as it has done in the past.
The IRS also no longer mails tax forms to U.S. taxpayers. While the IRS has said that the tax forms are available at many post offices and public libraries, this is not necessarily true and can cause frustration for taxpayers who make repeated unsuccessful trips to these facilities in search of the documents.
These policies overlook the millions of Americans who still file their tax returns by mail and/or prepare their returns themselves.
Ironically, these IRS decisions come during a spike in fraud and identity theft directly related to online tax filing. In recent testimony before the Senate Finance Committee, the Government Accountability Office testified that the IRS has seen a 400 percent increase in fraud and identity theft directly related to the e-filing of tax returns since 2008.
From requiring electronic receipts for every purchase to allowing public utilities to charge fees for paper statements and bills, states are hurting access to key paper-based resources or not doing enough to sustain them.
In every financial transaction, we believe paperless should not be the default. We also believe people should not be charged a fee for paper delivery, especially when it pertains to their finances.