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Auto Portability - Recent Developments
Find the most-recent auto portability media coverage and developments.
PRESS RELEASE - Vanguard and Retirement Clearinghouse to Offer Auto Portability Service to 401(k) Participants
VALLEY FORGE, PA (September 21, 2021)—Vanguard today announced plans to introduce an auto portability service for 401(k) sponsor clients and their participants. The firm has engaged Retirement Clearinghouse, LLC (RCH)—a leading provider of consolidation services for defined contribution plans and an RLJ Companies' majority owned company—to provide plan sponsors with a new portability solution to simplify small-balance 401(k) rollovers, help more employees preserve their retirement savings, and improve their chances of investment success. The service is expected to launch in mid-2022.
401k Specialist's Brian Anderson covers the 7/27/21 announcement from Retirement Clearinghouse (RCH) that the firm has surpassed $10 billion in retirement savings consolidations. The achievement, noted Anderson, "represents a greater than threefold increase in the amount of retirement account transfers completed on behalf of American workers in just six years" and extensively quotes RCH's President & CEO Spencer Williams.
In a 7/20/21 press release, RCH announces that Renee Wilder Guerin, former Director of the Federal Thrift Savings Plan, has joined Retirement Clearinghouse (RCH) as Executive Vice President of Public Policy, with responsibility to drive support for public policy matters aiming to preserve retirement savings and increase retirement security for all Americans. Ms. Wilder Guerin will be taking over the position from Tom Johnson, who is retiring.
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.
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%."
Writing in Benefits Quarterly magazine, RCH founder, president and CEO Spencer Williams examines the multi-faceted problem of "small accounts" and describes how plan sponsors, providers and recordkeepers can take proactive measures to solve the problem by adopting auto portability. By adopting auto portability, Williams contends that the improved outcomes for participants could "mitigate the risk of 401(k) fee lawsuits and other legal actions down the line."