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©Copyright 2000 Rogers Media. The following article first appeared in the August 2001 edition of
BENEFITS CANADA magazine.
PENSION OPTIONS
Paperless pensions
Regulatory guidelines for electronic communication are long overdue.
Hopefully, they will move more plan sponsors online.
By Dian Cohen
Since time began, traditional ways of doing things have been replaced by more
efficient and less expensive alternatives. These new ways have always garnered their share of
criticism. But they have also earned accolades from converts.
Technological developments have been vitally important in the process of
change. The Internet and the World Wide Web have given ordinary people the same power as elites
to communicate.
Rule makers in government now have to contend with citizens who know as much
about policy issues as they do, and have alternative views of solutions or
implementation.
In this industry, pension plan sponsors and administrators have to include
member and pensioner representation when they make policies for the plan. And regulators are
finding themselves overburdened with the task of reinterpreting or rewriting long-standing
rules rendered irrelevant or unworkable by new ways of doing things.
TIME FOR CHANGE
Courtesy of the Canadian Association of Pension Supervisory Authorities
(CAPSA), we now have proposed regulatory guidelines for electronic communication in the pension
industry. Thank heaven!
It's high time the regulators got together to suggest how the outmoded
language of pension legislation can be adapted to take into account the cheaper and faster ways
of reaching the ultimate beneficiaries of pension plans afforded by electronic
communications.
If I sound a bit impatient, it is because many people still seem to believe
that only physical reality is real. Financial institutions are still contentious in their
acceptance of a faxed signature, and online retailers still provide a phone number so a buyer
doesn't have to key in his or her credit card number in case some virtual thievery ring
accesses it. As if flesh-and-blood pickpockets don't exist!
Without question, pension information will remain available on paper for plan
members who can't or won't use a computer. By and large though, that group is shrinking as fast
as defined contribution plans are growing.
Even for the many people who were adults 20 years ago and didn't grow up with
the Internet, online activity--buying, selling and chatting--is growing by leaps and bounds.
And the benefits of such activity outweigh the disadvantages.
DUAL GOALS
CAPSA's short paper on electronic regulation hits at least one bird with one
stone, and if we're lucky, it will hit two. First, it highlights the necessity of accommodating
a paperless world under pension law, pointing out that there are issues to be resolved, such as
ensuring that electronic signatures are "reliable for the purpose of identifying a plan
member"--a phrase in the legislation that was originally meant for a written signature.
The paper also seems to be aimed at getting the ball rolling on a formal
reinterpretation of the benefits standards legislation, and to solicit much-needed feedback of
interested parties so that everyone can sing comfortably from the same song sheet.
The second bird that needs to be hit is the employer who has yet to automate
its pension and benefits activities. New entrants to the workforce are particularly anxious to
access their accounts online.
If the CAPSA paper pushes discussion of formal guidelines for electronic
communication forward, laggard employers may begin to focus on the efficiency and financial
savings that will ultimately accompany such a move. The sooner the legislators embrace the
brave new world, the better.
Dian Cohen is an economics consultant with a special interest in
pension issues. diancohen@sympatico.ca.
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