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Auto Portability - Public Policy
Learn more about retirement savings public policy positions related to Auto Portability.
NAPA Net's John Sullivan delves into recent cashout leakage research that finds a correlation between more-generous employer matching contributions and higher incidences of leakage. Sullivan also examines auto portability, turning to RCH president & CEO Spencer Williams, who addresses the Portability Services Network (PSN), a newly-formed "independent entity that acts as a utility" to foster adoption of the new automatic feature. Williams provides updates on PSN's recordkeeper membership, and states: "[w]e expect to have the beginnings of reportable activity by the end of the year.”
Writing for Georgetown University's Center for Retirement Initiatives (CRI), retirement and investment expert Catherine Reilly assesses the impact of recent policy reforms, including the passage of the SECURE 2.0 Act in December 2022, which "provide an opportunity to significantly improve retirement savings portability to the benefit of participants, employers, and retirement plan providers." Reilly notes the pitfalls facing retirement savers trying to build wealth, including the difficulties in consolidating multiple retirement savings accounts, which increases the prevalence of cashing out. Reilly notes the formation of the industry-led Portability Services Network, along with provisions of SECURE 2.0 that provide a safe harbor for adopting auto portability, and concludes with a call-to-action, writing: "Now is the time for the U.S. to get it done. Facilitating portability and account consolidation are two of the most important ways to boost retirement savings and enhance the effectiveness of current and future policy reforms."
In PLANSPONSOR's March-April online magazine, reporter Debbie Carlson chronicles the key regulatory developments that have provided employees with greater workplace retirement savings plan access. Carlson devotes a section to auto portability, providing readers with a timeline of key events dating back to 2001, when EGTRRA spawned automatic rollovers, as well as more contemporary developments surrounding the formation of the Portability Services Network (PSN). Carlson turns to RCH executives Spencer Williams and Neal Ringquist, who supply projections for the expansion of PSN's network. Also supporting auto portability's efficacy in stemming cashout leakage is Morningstar's Jack VanDerhei, a respected retirement researcher and formerly of EBRI.
NAPA Net's staff covers breaking news that "TIAA has joined Retirement Clearinghouse, LLC (RCH) alongside Empower, Fidelity, Vanguard and Alight linking up with the Portability Services Network, LLC (PSN)." NAPA Net's article reference's TIAA's press release, and also notes the inclusion of provisions for auto portability in the recently enacted SECURE 2.0 Act of 2022.
In the March-April edition of the Employee Benefit Plan Review, Katrina Berishaj and Megan Stamm collaborate to perform an extensive legal analysis of the provisions for auto portability included in the recent SECURE 2.0 Act. Their analysis dives deep into the detail of those provisions, including the primary processes and fiduciary responsibilities that are encompassed by the legislation.
Taking part in a SECURE 2.0 panel at the 3/8/23 DCIIA Innovation Forum, Alight Solutions' Greg Long took the opportunity to inform and educate attendees about auto portability and the new Portability Services Network. Long offered a primer on auto portability -- how it addresses long-standing portability and cashout leakage issues within America's defined contribution system -- and how the formation of the new Portability Services Network will rapidly advance the availability and adoption of the new feature. Long's comments begin at the 21:25 mark.
The editors of NAPA Net examine a Senate bill proposed by Sens. Hickenlooper and Tillis (Retirement Savings for Americans Act) that they contend would effectively establish a federally-sponsored multi-employer (MEP) plan that would compete with private plans. The article cites auto portability as one of several initiatives in the private sector that shows responsiveness to the needs of the under-saved, and obviating the need for such over-reaching federal legislation.
The New York Times' Charlotte Cowles examines the problem facing millions of Americans who'll change jobs, leaving behind retirement savings at their former employer, or worse -- cashing out their savings altogether. Cowles turns to Vanguard's Steve Holman, who characterizes auto portability as the easiest, default solution, stating: “[a] participant doesn’t even have to do anything. You go to a new job, open a new plan, and the Portability Services Network will automatically find your old account and transition those assets in short order.” Holman also expresses confidence that "over time, we’ll have broad adoption across the industry" of auto portability.