Advocates Continue to Emerge for Portability Solutions Designed to Enhance Retirement Security
CHARLOTTE, N.C.—June 16, 2016—Retirement Clearinghouse, LLC welcomes the report issued by the Bipartisan Policy Center’s Commission on Retirement Security and Personal Savings which, among other proposals, recommends the adoption of processes that enable the seamless transfer of retirement savings between defined contribution plans when participants change jobs. The report, “Securing Our Financial Future,” notes that these solutions can increase retirement savings by reducing cash-outs and early withdrawals by plan participants, who are most vulnerable to making these destructive decisions at the point of job-change.
During the Bipartisan Policy Center’s discussion on June 9, 2016 in Washington, D.C., panel participants highlighted the Commission’s recommendation to establish a nationwide private-sector retirement security clearinghouse to help participants seamlessly move retirement savings account balances from plan to plan as they change jobs, and consolidate multiple retirement accounts in a participant’s current-employer plan.
“We are gratified to see major retirement policy advocates such as the Bipartisan Policy Center spotlighting the serious issues posed by premature retirement plan cash-outs, and for coming to the conclusion that our retirement system needs an industry-wide utility that will help participants easily and automatically move their retirement savings into their present-employer plans when they change jobs,” said Spencer Williams, President and CEO of Retirement Clearinghouse. “We remain committed to addressing the critical issue of small-account leakage by supplying the technology and infrastructure needed to help participants, plan sponsors, and record-keepers facilitate plan-to-plan portability, so that Americans retain more of their hard-earned savings for retirement. We will continue to advocate for the broad adoption of auto portability and other portability solutions that improve retirement security and strengthen the existing retirement system, and we are pleased to see the movement toward widespread adoption gaining speed.”
Toward the end of the panel discussion, Dallas Salisbury, Resident Fellow and President Emeritus of the Employee Benefit Research Institute, who is a member of the Bipartisan Policy Center’s Commission on Retirement Security and Personal Savings, noted that the day before, Retirement Clearinghouse team members testified before the ERISA Advisory Council at the U.S. Department of Labor regarding the firm’s ongoing efforts to introduce auto portability into the retirement system, and to educate policy-makers and industry players about auto portability’s important role in promoting lifetime participation in retirement plans.
Retirement Clearinghouse introduced version 1.0 of its Auto Portability Simulation (APS) last month to compare different scenarios over time for the approximately 5 million Americans who change jobs each year and have retirement savings accounts with less than $5,000. The APS demonstrates that, in a scenario where auto portability is widely adopted over a 10-year period and remains in force for a generation, cash-outs among accountholders with balances below $5,000 would decrease by two-thirds (from $7 billion per year today to less than $2.5 billion per year). The APS also shows that, under these conditions, more than $115 billion in savings would be added to the retirement system. For more information about the APS, please visit: https://info.rch1.com/auto-portability-simulation-ebri-policy-forum.
The Bipartisan Policy Center established its Commission on Retirement Security and Personal Savings in 2014 to identify, and forge a bipartisan consensus to support, policies to strengthen retirement security. To download the report or find more information, please visit http://www.bipartisanpolicy.org/library/retirement-security/.
To view videos from the Bipartisan Policy Center’s recent panel discussion in Washington, D.C., please visit http://www.bipartisanpolicy.org/events/securing-our-financial-future/.