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Auto Portability - Recent Developments
Find the most-recent auto portability media coverage and developments.
Writing in BenefitsPro, David Baumann recaps a 1/6/2022 report by the Aspen Institute that identified a compelling need for portability, yet "more than 40 years after a presidential commission recommended making retirement programs more portable, policymakers are still struggling with the issue." Baumann notes that the Aspen Institute's paper cited a number of key factors making the case for auto portability, including: 1) the propensity of American workers to change jobs, 2) to cash out following a job change, and 3) an EBRI survey finding that "85% of retirement savers would find automatic transfers between programs valuable." Baumann also noted that "[a]n Aspen survey of retirement experts found that 57% supported a mandate" for auto portability, while 48% of the same experts believed that auto portability was feasible without a mandate.
Writing in 401k Specialist, RCH’s Tom Hawkins opines on the release of the ERISA Advisory Council’s latest report – “Gaps in Retirement Savings Based on Race, Ethnicity and Gender.” In that report, Cindy Hounsell, President of WISER, observed that auto portability's benefits would primarily accrue to those with lower incomes, to minorities, and to women. The EAC's final report also included a recommendation to “study the feasibility of a national portability system” – more commonly referred to as auto portability. Hawkins found the EAC’s recommendation “remarkable given the fact that it emanated from a diverse group of 14 industry experts holding a wide range of opinions on practically any topic.”
NAPA Net's Ted Godbout covers the release of the ERISA Advisory Council's report, entitled "Gaps in Retirement Savings Based on Race, Ethnicity and Gender.” The report makes five key recommendations, including the need to "address fragmentation" within the retirement system. It is within this recommendation that Godbout notes that the report advises taking up the investigation of auto portability, framing it as "studying the feasibility of a national portability system to encourage and facilitate account consolidation and retirement savings preservation for individuals with small account balances in several plans."
PLANSPONSOR reporter Noah Zuss covers EBRI's 1/20/22 Issue Brief #550, which examined the impact of four recent policy proposals upon the nation's retirement deficits, including their impact on racial and ethnic demographic segments. While all proposals reduced retirement savings shortfalls, the combination of ACPAs and an enhanced saver's credit produced the best results. Importantly, when auto portability was added to both the ACPA and saver's credit, overall retirement savings shortfalls further decreased by 10.8% to 14.3%, depending on race/ethnicity.
401k Specialist Editor-in-Chief John Sullivan examines the latest Issue Brief from the Employee Benefit Research Institute (EBRI), which assesses the impact of recently-proposed changes to the retirement system and how they could shrink retirement deficits. Sullivan notes that "combining automatic contribution provisions with an enhanced Saver’s Credit in 401ks and DC plans would reduce retirement savings shortfalls by 17% to 26%, depending on race" adding that "the addition of auto portability of retirement accounts resulted in a further double-digit reduction in savings shortfall across all races examined."
Robert L. Johnson, Founder and Chairman of The RLJ Companies and majority owner of Retirement Clearinghouse (RCH), has secured endorsements for auto portability from two premier civil rights organizations – the National Urban League, and the National Association for the Advancement of Colored People (NAACP) – both with over a century of experience advocating for solutions that address the inequities and economic challenges experienced by Black Americans and by other communities of color. Writing in 401k Specialist, RCH's Renée Wilder Guerin, Executive Vice President, Public Policy, summarizes these major developments.
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.
On 12/6/21, Kathleen Kennedy Townsend, Special Assistant to the Secretary of Labor for Retirement, served as the keynote speaker at EBRI's 90th Public Policy Forum, and outlined the big-picture, retirement-focused priorities of the DOL. One of the DOL's three priorities is the issue of portability and leakage. Writing in 401k Specialist, RCH's Tom Hawkins examines Townsend's remarks to her EBRI audience, which revealed that she has a clear grasp of the magnitude of the cashout leakage problem, as well as its most-promising solution – enabling plan-to-plan portability.