These days, nearly everything – and everyone – is online, including retirement plan participants. Participants can use their plan’s websites or online portal to do just about anything – enroll (or disenroll), make or change contribution elections, select or change investment options, request distributions, etc.
Not surprisingly, the design of a plan’s website/portal can affect participants’ retirement decision-making. For instance, a 2020 study by professors at UCLA and Carnegie Mellon showed how changes to a site’s color schemes, use of standardized language, and display of the plan’s default investment rates could increase participant enrollment and contribution rates. Likewise, other recent studies have shown how using “responsive design” in the creation of plan websites/portals1 can boost participant engagement, and how using simplified language can optimize the effectiveness of plan communications.
As plan sponsors become more attuned to the impact their plan websites/portals can have on overall participant experience, a recent case in the Northern District of Illinois, Bernstein-Ellis v. AT&T Pension Plan and AT&T Services, Inc. (No. 20 C 7010 (N.D. Ill. May. 17, 2021)), serves as a reminder to plan fiduciaries to consider how their plan’s online presence may affect their fiduciary obligations to participants.
The plaintiff in the case was the surviving spouse of a former employee of the defendant company. The employee took a leave of absence and began receiving employer-provided disability benefits after he was diagnosed with an aggressive form of cancer. Just days before his scheduled retirement date, the employee died.
The plaintiff alleged that, before his death, the employee tried to use the plan’s website to accelerate his planned retirement date (thereby allowing the plaintiff to receive a 100% survivor benefit from the plan). However, allegedly finding navigation of the plan’s website confusing and frustrating, the employee could not determine how to make a pension election, and no changes were made. The employee later emailed his direct supervisor (who was not a plan fiduciary or representative) to inform her of his health situation. While noting his scheduled retirement date and his desire to manage his situation the “best as I can to set my wife up,” the employee provided his supervisor with few additional details.
After her husband’s death, the plaintiff requested a 100% survivor benefit from the plan. The plan denied her claim, informing her that only a 50% retirement benefit was available (because the employee died before his scheduled retirement date). When her subsequent appeal was denied, the plaintiff sued under ERISA.
Among other claims, the plaintiff argued that the defendants breached their fiduciary duty of loyalty to the employee by failing to provide: (i) a user-friendly internet portal that would have allowed him to make retirement decisions consistent with his expressed desire to provide for his wife after his death, and (ii) “live” human assistance that would inquire as to his circumstances and intent, answer questions, and facilitate his election of an earlier retirement date.
The defendants responded with a motion to dismiss, contending the plaintiff had not alleged (i) the plan’s language was ambiguous or unclear, or (ii) the employee had notified the defendants of a need for assistance or information about his plan benefits or elections.
The District Court granted the defendants’ motion to dismiss, finding the plaintiff’s allegations about the plan’s internet portal to be “impermissibly vague.” Further, the Court noted that, in any event, the plaintiff had cited “no authority for the proposition that ERISA requires plan fiduciaries to provide an online portal, let alone in a particular format, or ‘live’ assistance, to make elections under a plan.” Finally, the Court determined the employee’s email to his supervisor could not reasonably be interpreted as a request for assistance triggering a fiduciary obligation from the defendants, as the employee had not mentioned any difficulties with the plan’s website or requested help from the plan’s fiduciaries or representatives with either the portal or his elections.
The Court was undoubtedly correct – ERISA doesn’t require plan fiduciaries to offer participants use of a website/portal, or mandate how such sites should be designed. (Given that the modern concept of the internet wasn’t even “born“ until 1983, it’s not surprising Congress didn’t mention it when it adopted ERISA in 1974.2) It does, however, require plan fiduciaries to administer plans in the best interests of participants and beneficiaries, “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims."3
Through its reference to “the circumstances then prevailing,” Congress anticipated the impact new processes and technologies might have on plan administration. It’s therefore not unreasonable for today’s plan fiduciaries to consider how the design of a plan’s website or portal might affect participants’ overall plan experience.
To avoid allegations like those raised by the plaintiff in the case discussed above, plan fiduciaries should periodically review their plan’s website or portal, employing a reasonable process when doing so, and applying the same level of care, skill, prudence, and diligence they would to make any other plan decision. That could mean employing (and monitoring) website consultants to assist with design considerations, weighing the features of a recordkeeper’s plan website or mobile app when selecting a new vendor for that role, etc.
In other words, when it comes to retirement plan websites/internet portals and ERISA fiduciary duties, the more things change, the more they stay the same.
1 Using “responsive design” allows a plan to design its website to provide participants with the optimal user experience regardless of the interface they’re using – i.e., smart phone, tablet, computers, etc.
2 Heck, they couldn’t even “tweet” about it back then.
3 ERISA §404(a)(1)(B) (emphasis added).
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