Foundational Research

Vanguard: Retirement Plans Should Evolve for the Modern Worker

On June 7th, Vanguard released the newest edition of How America Saves, the firm’s seminal report on 401(k) plan design and retirement savings habits. Through its annual, comprehensive analysis of nearly five million 401(k) accounts recordkept at Vanguard, the report reveals additional plan design opportunities employers can address to further improve workers’ retirement readiness. In the release, under key findings, Vanguard notes that "cash outs disproportionately impact younger, low-balance participants" and adds that "[a]uto portability services and revisions to minimum balance rules can help decrease cash out rates."

401k Portability in Four Movements: Case Study

Writing in 401k Specialist, RCH's Tom Hawkins examines the experience of a very large (250,000+ participants) 401(k) plan sponsor that has been highly successful in delivering improved participant outcomes by incrementally adopting a full program of retirement savings portability. Looking at four distinct five-year periods that coincided with increasing levels of portability and improved participant outcomes, Hawkins writes that "there’s no finer example of those [improved] outcomes than the multi-year, real-world experience of this plan sponsor, where thousands of participants increased their prospects for a timely and comfortable retirement."

Key 401k Portability Finding in EBRI’s Retirement Confidence Survey

Writing in 401k Specialist, RCH's Tom Hawkins digs into EBRI's 2022 Retirement Confidence Survey (RCS), locating an interesting and valuable finding not referenced in the organization’s initial report, officially released to the public on Thursday, April 28th. In an excerpt of a report available to survey partners, the survey found that a plurality of job-changing 401(k) plan participants favor automatic plan-to-plan portability over consolidating their savings to an IRA, or to leaving their savings behind in their former employer’s plan. This result comes on the heels of EBRI’s 2021 survey, which found that nearly 9 in 10 participants believed that auto portability would be valuable to them. Hawkins adds that "others -- including the Department of Labor – could find 401(k) participants’ strong preference for plan-to-plan portability compelling."

Key Portability Finding Located in EBRI’s Retirement Confidence Survey

RCH's Tom Hawkins digs into EBRI's 2022 Retirement Confidence Survey (RCS) and finds an interesting and valuable finding not referenced in the organization’s initial report, officially released to the public on Thursday, April 28th. In an excerpt of a report available to survey partners, the RCS has found that a plurality of job-changing 401(k) plan participants favor automatic plan-to-plan portability over consolidating their savings to an IRA, or to leaving their savings behind in their former employer’s plan. This result comes on the heels of EBRI’s 2021 survey, which found that nearly 9 in 10 participants believed that auto portability would be valuable to them, and Hawkins believes "others -- including the Department of Labor – will find 401(k) participants’ strong preference for plan-to-plan portability compelling."

How to Improve Retirement Readiness in Under-represented Groups

ASPPA Net's Ted Godbout reviews the latest research report from Alight Solutions, entitled "Improving Retirement Readiness for Underrepresented Groups." Reporting on Alight's findings, Godbout highlights the six steps that Alight offers plan sponsors to increase retirement savings for historically under-represented groups. As one of those steps, Alight advises sponsors that "implementing auto-portability can help reduce the number of automatic cash-outs that occur when people change employers" and that auto portability's impact is "most profound for marginalized groups."

Also featured in NAPA Net

Improving retirement readiness for underrepresented groups

Alight Solutions has released a new research report, entitled "Improving Retirement Readiness for Underrepresented Groups." The new paper identifies six key actions that plan sponsors can undertake to boost retirement savings for historically under-represented groups. In one of those actions, Alight advises employers that "implementing auto-portability can help reduce the number of automatic cash-outs that occur when people change employers" and that auto portability's impact is "most profound for marginalized groups."

Direct link to report (PDF format)

EBRI Issue Brief #550: Auto Portability’s Massive Incremental Benefits to Pending Legislation

EBRI Issue Brief #550, released 1/20/22, examines the effects of various public policy initiatives, including an Automatic Contribution/Plan Arrangement (ACPA), an enhanced saver's credit, a "skinny" 401(k), and a student loan debt employer match. Importantly, the EBRI study noted the massive, incremental effects of auto portability, when added to the ACPA and Saver's Credit, where it reduced overall retirement deficits by 11% to 14%, depending on race.

The Aspen Leadership Forum on Retirement Savings

In a publication released 1/6/2022 as part of the Aspen Institute's Financial Security Program, the 2021 Aspen Leadership Forum on Retirement Savings Report is a summary of the April 2021 Aspen Leadership Forum on Retirement Savings. The Forum's report devotes a page to "Six Stats That Tell the Portability Story" which notes the propensity of American workers to change jobs and to cash out. It also mentions two compelling statistics: 1) that 85% of participants like the idea of automatic portability and 2) that 57% of retirement experts supported a government mandate for auto portability, while almost half (48%) believed that automatic portability was feasible without such a mandate.