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Auto Portability - Public Policy
Learn more about retirement savings public policy positions related to Auto Portability.
Writing in 401k Specialist Magazine, RCH's Tom Hawkins takes a deep dive into draft SECURE 2.0 provisions that dramatically expand the purpose, scope and scale of a Retirement Savings Lost & Found. Hawkins contends that the new provisions, as currently written, would create a massive, government-run repository of micro-balance accounts costing taxpayers millions, while failing to boost retirement security. Hawkins encourages Congress to return to an earlier Lost & Found model, while addressing the broader, small-balance account problem through policies that incentivize the adoption of auto portability.
Writing in 401k Specialist, RCH EVP Tom Johnson reports on the U.S. Senate’s Committee on Health, Education, Labor and Pensions (HELP) 5/13/21 hearing on retirement security. With testimony from a blue-ribbon panel of witnesses, the hearing had a broad focus, but the topic of retirement savings leakage, and its most-promising solution, auto portability, were prominently featured in testimony by EBRI CEO Lori Lucas, and echoed by other witnesses and Committee members.
Writing in 401k Specialist Magazine, RCH’s Tom Hawkins examines a retirement savings leakage study from the Joint Committee on Taxation, a nonpartisan committee of the United States Congress. Released with little fanfare on 4/26/21, the study confirms the findings of earlier research on cashout leakage – namely, that cashout leakage is a big problem, is driven by job changing, and is exacerbated by "forced distributions and [a lack of] portability of plans.”
Writing in RCH's Consolidation Corner, RCH EVP Tom Johnson reports on the U.S. Senate’s Committee on Health, Education, Labor and Pensions (HELP) 5/13/21 hearing on retirement security. With testimony from a blue-ribbon panel of witnesses, the hearing had a broad focus, but the topic of retirement savings leakage, and its most-promising solution, auto portability, were prominently featured in testimony by EBRI CEO Lori Lucas, and echoed by other witnesses and Committee members.
EBRI CEO Lori Lucas, testifying on retirement security before the U.S. Senate's Health, Education, Labor and Pensions (HELP) Committee on 5/13/21, targets "reducing plan leakage" as a key policy initiative, and identifies auto portability as a solution that could dramatically lower cashout leakage levels. Lucas points to EBRI research that quantifies auto portability's projected benefits of $2.0 trillion when applied to all balances, $1.5 trillion when applied to balances less than $5,000, and its ability to significantly boost the benefits of other policy initiatives, such as open MEPs.
InvestmentNews retirement and insurance reporter Emile Halez covers testimony before the U.S. Senate Committee on Health, Education, Labor & Pensions (HELP), which convened for the first time since 2013 to discuss retirement security. Halez notes that the focus of the committee included emergency savings and student loans, but also addressed the promise of auto portability as a means to addressing excessive cashout leakage. EBRI CEO Lori Lucas carried the auto portability banner before the HELP Committee, telling the legislators that "open multiple-employer plans with automatic account portability between employers could reduce the money flowing out early from 401(k)s by an estimated 26%."
On 4/26/21, The Joint Committee on Taxation, a nonpartisan committee of the United States Congress, released the report "Estimating Leakage from Retirement Savings Accounts." Taking a novel approach, the report examines tax data to calculate a "leakage ratio" that represents the ratio of net distributions to net contributions for participants 50 or younger. The study clearly identified job-changing as the chief cause of leakage, finding that the leakage ratio is 26% in the "year of the event" but remaining high in years 2-5 that follow. The report further concludes that the use of "forced distributions and portability of plans likely affect leakage."
Writing in an opinion piece in Employee Benefit News, RCH President & CEO Spencer Williams addresses the consistent bipartisan support that auto portability has enjoyed in DC. This support, writes Williams, transcends party affiliation, extending across multiple Presidential administrations as well as both legislative branches of the U.S. Congress, and falls squarely in-line with policy initiatives that advance the interests of minority and low-income workers. Williams provides readers with an impressive, years-long list of actions & endorsements that reflect auto portability's broad-based support, which culminated last year with the nationwide rollout of the program.