By Neal Ringquist
At Retirement Clearinghouse (RCH), we’re excited about the 2020 prospects for auto portability. Before we’re too far into a new decade, we wanted to pause, take a breath and share with you some highlights from 2019, a year that’s positioned the newest automatic, default plan feature for widespread adoption.
In July, the U.S. Department of Labor (DOL) released the final Prohibited Transaction Exemption (PTE) to RCH for our auto portability program, Along with the DOL’s prior Advisory Opinion 2018-01A, the DOL’s PTE finalized the regulatory framework for auto portability.
Research & Public Policy
In August, independent research from the Employee Benefit Research Institute (EBRI) validated the benefits auto portability would deliver as 1) a standalone policy initiative, 2) in tandem with other expanded access policy initiatives, and 3) to specific demographic segments, including women and Millennials. In October, an Issue Brief released by the DC-based Savings Preservation Working Group provided the most comprehensive and authoritative analysis to-date of the 401(k) cashout leakage problem, estimated to be as high as $105 billion annually.
In March, EBRI Research Director Jack VanDerhei conducted a webinar addressing auto portability’s benefits to Millennials. In April, industry expert Michael Kreps, Principal, Groom Law Group, weighed in on auto portability, noting in a LIMRA webinar that auto portability has the potential to deliver “an enormous boost to the industry and to participants in general.” Finally, in September, RCH’s Spencer Williams and Neal Ringquist participated in an American Benefits Council webinar, presenting auto portability’s potential to address the industry’s missing participant problem.
2019 witnessed extensive media coverage of auto portability, with over 120 articles in a combination of national media outlets such as The Wall Street Journal, CNBC, Forbes and Medium, as well as industry coverage from PLANSPONSOR, Pensions & Investments, Employee Benefit News, NAPA Net, SHRM and many more. For a full listing with hyperlinks, visit our auto portability media coverage page.
In 2020, we anticipate continued industry focus on the benefits of auto portability, including new research from EBRI on the incremental benefits of auto portability on reducing the retirement savings shortfall (RSS) if coupled with the coverage initiatives in the recently passed SECURE Act. More importantly, in 2020 we also anticipate the first wave of auto portability’s adoption. We’ll continue to report these latest developments and more in our Consolidation Corner blog, and on the RCH1.com website, at https://rch1.com/auto-portability/recent-developments.