New Privacy Concern for Employee Benefit Plans: Combating Identity Theft

Abstract

Identity theft has become one of the nation’s fastest growing white-collar crimes. In response to the proliferation of identity theft cases and the severity of the cost of the crimes, several bills have been introduced in Congress that would set new boundaries for the use of Social Security numbers. California was the first state to enact a law that restricts employers and employee benefit plans from using or disclosing an individual’s Social Security number in any written material or communications unless certain conditions are met. Because the Social Security number is a unique identifier, employee benefit plans often use Social Security numbers for administrative purposes. There is no legal requirement for employee benefit plans to take any action at this time, but plan sponsors should consider taking steps to remove the Social Security number from circulation. By implementing policies and controls that abandon the use of Social Security numbers as participant identifiers, plan sponsors can help individuals manage and protect their personal information.