I’m not an art critic, and I don’t play one on the Internet.
So I understand this picture, (Untitled by Jackson Pollack, incidentally), as much as perhaps … say the average 401(k) participant understands his or her plan’s summary plan description (SPD). Which is to say, in many cases, not much.
And it’s quite obvious why not. Despite the regulatory requirement that SPDs should be written to be understood by the average plan participant, they are written by attorneys for attorneys. And why that is so should also be obvious. Despite such disclaimer clauses in an SPD as
This Summary Plan Description is a brief description of your Plan and your rights and benefits under the Plan. This Summary Plan Description is not meant to interpret or change the provisions of your Plan. A copy of your Plan is on file at your Employer’s office and may be read by you, your Beneficiaries, or your legal representatives at any reasonable time. If you have questions regarding your Plan or this Summary Plan Description, you should ask your Plan Administrator. If any discrepancies exist between this Summary Plan Description and the actual provisions of the Plan, the Plan shall govern.
attorneys have told me that courts often permit employees to rely on the SPD when it conflicts with the terms of the plan document.
And so what’s a plan sponsor to do?
Steve Rosenberg makes a very sensible suggestion in a recent post in his Boston ERISA & Insurance Litigation Blog, Summary Plan Descriptions and Grants of Discretion:
And some of this goes back to a fundamental issue, of whether participants really understand – or even read – the summary plan description, or whether it is instead simply something that gets pulled out by a participant’s lawyer after a claim for benefits has been denied. The summaries exist because we need to mandate disclosure, and certainly the more the better – but I don’t think it is realistic to structure a legal rule and indeed an entire regime around the myth that participants actually do read them, rely on them and understand them. When we do that, we move into simply creating traps that make the administration of plans more difficult and create loopholes to be exploited in litigation; while this may be good for lawyers’ wallets, I think we are all better served by legal rules that fit comfortably with how non-lawyers actually conduct themselves in their day to day lives.
Could this ever happen?