Employees are logging onto the Internet and their internal company intranets increasingly to check on their defined contribution plans.

According to a recent study by the Profit Sharing/401(k) Council of America (PSCA), nearly 40 percent of all businesses that offered 401(k) plans in 1997 also offered some sort of Internet or intranet account access. The study also found that among large sponsors -- companies with 5,000 plan participants or more -- 50 percent offered account access by Internet.

Fund companies that do offer Internet access to participants through their sponsors are still in the minority and many that do are still just testing programs on a limited basis, says Dirk Quayle, vice president of product development at Business Logic Corp. of Chicago. Business Logic develops Internet programs that connect workers with their 401(k) plans. While it appears that Internet access is becoming more popular, it will not ever completely replace paper statements and the use of the telephone, says David Wray, president of the Profit Sharing/401(k) Council.

Wray says that Internet access is being used because it is cheaper for plan providers. But, many employees do not work with computers and others are not comfortable with them. Therefore, the Internet is merely another resource, not a replacement to paper and the phone.

"Comfort and trust are very important issues," Wray said. Some people "need to have paper to be comfortable. You need all these applications."

Fidelity Investments, since 1996, has offered Internet access to its defined contribution plans through its NetBenefits program. While the company expects plan participants to someday use the Internet more than live phone representatives to obtain basic retirement account information, it does not expect the Internet to ever entirely replace the phone reps. Instead, it expects the increased use to gradually free up telephone representatives for other tasks.

The company says that 610,000 of the 5 million workers enrolled in Fidelity defined contribution plans are now using the Internet to get information about their accounts. Over the past few weeks, some 17,000 customers each week have been signing up for Internet access to their defined contribution accounts. During the market swings of August and September, there were as many as 80,000 connections a day made to NetBenefits. That outnumbered calls to live telephone reps but probably not calls to the automated phone line.

John Hancock Retirement Services has been offering Internet account access to 401(k) plans since July. During the month of August, customers called the online retirement services center 14,000 times, said a spokesperson. Eighty-three percent of the time, investors were visiting for simple inquiries like checking their balances, while the rest of the time they were performing transactions like exchanging shares between funds.

Vanguard also provides its customers access to their retirement plans via the Internet. A Vanguard spokesman declined to say just how many customers are using the Internet for that purpose. He said however that about one-third of all Vanguard's business, including servicing, is conducted over the Web.

NY Life Benefit Services has offered Internet access to its defined contribution plans since May 1997.

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