Auto Portability - Public Policy
Learn more about retirement savings public policy positions related to Auto Portability.
PLANSPONSOR's Rebecca Moore examines new EBRI research that demonstrates the "large impact" that auto portability can have on reducing Gen Xer women's retirement savings shortfalls. When EBRI adds auto portability to their projection model, Moore reports that the average shortfall for those with 21 to 30 years of future DC eligibility is reduced by 21% for single females to as much as 38% for widowers.
In his latest article in Employee Benefit News, RCH President & CEO Spencer Williams examines the impact of "sidecar" accounts, which he views as a positive trend and a feature that could serve as a useful tool in the struggle to curtail leakage of savings from defined contribution plans. Williams also contends auto portability will be essential to plugging the biggest hole in the retirement system’s "bucket" -- cashout leakage -- which represents 89% of the overall leakage problem.
ThinkAdvisor's Michael S. Fischer takes a deep dive into EBRI research that examines the gender disparity in retirement savings deficits projected for single women and widows. Fischer also highlights the EBRI finding that, for employees with 21 to 30 years of future DC plan eligibility, auto portability reduced the average retirement savings shortfall by 21% for single women and by as much as 38% for widowers.
New EBRI Research, released 1/17/19, reveals a troubling Retirement Savings Shortfall (RSS) that is significantly higher for Generation X women, including both single females and widows, than for their counterparts. However, EBRI also found that auto portability made a "significant dent in these retirement deficits." According to EBRI, with auto portability "we found at least a double-digit percent reduction for all groups with future years of defined contribution plan eligibility, and for those with 21–30 years of eligibility, we found a 21 percent reduction in deficits for single females and a 31 percent reduction for widows."
401(k) Specialist contributor Tom Hawkins examines the official public comments by large, retirement-focused organizations on the proposed RCH Auto Portability Prohibited Transaction Exemption (PTE), which were posted on 1/7/19. Some distinguished retirement industry organizations weighed in, representing a diverse cross-section of stakeholders, including: retirees, women, businesses, plan sponsors, retirement industry professionals, securities firms, banks, and asset management companies. If their feedback is any indication, then auto portability has a bright future.
At the end of 2018, major retirement industry organizations were asked to comment on the DOL’s proposed prohibited transaction exemption (PTE) for the Retirement Clearinghouse (RCH) auto portability program. After a brief delay brought about by the partial federal government shutdown, all official comments have been publicly posted. If the views of these organizations are any indication, auto portability has a bright future.
In his ongoing "Barry's Pickings" column for PLANSPONSOR, Michael Barry, president of O3 Plan Advisory Services LLC, gives the U.S. Department of Labor an 'A' for its November 2018 issuance of a proposed Prohibited Transaction Exemption (PTE) and an Advisory Opinion on Auto Portability. Barry adds: "as a long-time advocate of the establishment of a clearinghouse, I view this as very good news."
In an article carried in their WISERWoman Fall 2018 newsletter, the Women's Institute for a Secure Retirement (WISER) spreads the "good news" that the U.S. Department of Labor has issued an Advisory Opinion on auto portability, clearing the path for the automatic transfer of small 401(k) balances of $5,000 or less. The WISER article also notes that women are hard-hit by retirement savings cashout leakage, with 2.4 million women cashing out $28 billion per year from 401(k) plans.