While marketing snafus are embarrassing to company profiles, database errors for retirement professionals can put you out of compliance. Work with the postal service to ensure that mail can be returned and doesn’t end up in the dead zone and follow best practices on database management.
Marketing professionals know the dread of a database snafu. As corporations continue to make moves towards harnessing the power of data and collect more and more of it, the basics can get mixed up. In one example, a poorly scrubbed database was imported into a marketing campaign, resulting in one woman receiving an invite to a credit card addressed to “Lisa is A Slut McIntire.” While marketing snafus are embarrassing to company profiles, database errors for retirement professionals can put you out of compliance. Errors can be human induced, like changing the street address, but not the street name, on a customer’s file causing mail to bounce back and delaying essential information. Errors can be database specific, like adding too many variables to a table and polluting data.
Getting information to plan participants who are currently employees of the plan sponsor should be a no-brainer, there’s no need for access to a database when flyers, email or other internal communications methods can get information to those participants. In fact, the Department of Labor has special rules that allow information to be sent to employees, or placed on websites, called “Wired at Work.”
And now, the Department of Labor (DOL) is moving to increase its surveying of financial advisor’s mailings. Recently, the DOL announced it would extend a pilot program launched in Philadelphia to apply nationwide. That program examines Forms 5500 (Annual Reporting) for defined benefit plans to find participants who were not receiving payments but had not received a payout. Curious, the DOL investigators sent inquiries to the plan sponsors and received notice that the participants were missing or could not be located. DOL then contacted the participants and received information back from the participants that they were waiting for payment from the pension plans. The DOL’s efforts to reunite plans and participants resulted in a payout of $165 million to the missing participants. While there could be 165 million reasons those participants slipped through the cracks, a good portion probably relate to bad data tracking. While it’s notable that this investigation focused on defined benefit plans, not defined contribution plans, the results of this investigation could incentivize the DOL to dig into missing participants across a range of retirement plans.
How can you prepare for a similar audit of your data? First, note the DOL’s rules on distribution. The DOL’s disclosure rules apply to open enrollment materials, summaries of material modifications, summary annual reports, and 401(k) plan notices (including blackout period notices). Distributing materials by paper allows for plan administrators to receive returned mail and update physical addresses in some, but not all cases. As the Postal Service notes, “mail that is undeliverable as addressed is forwarded, returned to the sender, or treated as dead mail, as authorized for the particular class of mail.” Change of address orders, for most mail, only remain in the Postal Services’ system for 18 months. And, dead mail? “Dead mail is matter deposited in the mail that is undeliverable and cannot be returned to the sender. A reasonable effort is made to match articles found loose in the mail with the envelope or wrapper and to return or forward the articles.”
An alternative to relying on mail for sending information to plan participants would be email or other electronic means. The DOL has specific rules that provide guidance for plans to send notices by electronic mail. Those rules are referred to as the Safe Harbor rules and are addressed in other articles.
So, what is the best method to ensure your plan participants who no longer work for the plan sponsor? The DOL suggests to retirees check any statement you receive from the plan to insure that the information is accurate, including your address. Plans can also work with the postal service to ensure that mail can be returned and doesn’t end up in the dead zone.
Plans can also work with their databases to ensure that data is scrubbed and accurate. The top tip from database experts: Make sure the database is working at peak performance for those entering the data, both on the plan administrator side and on the participant side. Glitches, failure to load and time outs will increase user error and affect data quality. Other tips include making sure moving from one database to another or upgrading versions is done with an eye towards the essentials, like not combining zip code fields or eliminating street numbers. Finally, make sure that staff understand how important addresses are in complying with DOL requirements and train help staff to always verify addresses are up to date on every call from a retiree.
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.get xpress proposal