TRANSCRIPT:

Tom Hawkins: Welcome to the Consolidation Corner Channel, where we provide you with audio content that explores key issues in the preservation and consolidation of retirement savings in America’s defined contribution system. Today, we’ll be examining two crucial initiatives, both of which were addressed in the SECURE 2.0 Act – the Saver’s Match Program and Auto Portability. We hope you’ll find the audio enjoyable and informative.

Narrator: Welcome to this episode of the Consolidation Corner Channel, where we explore two groundbreaking initiatives that could transform retirement savings in America. The Saver's Match program and auto portability are emerging as powerful tools to help Americans build their retirement nest eggs. The Saver's Match program is scheduled to launch with the 2027 tax year, offering a significant boost to low and middle-income savers. Starting in 2028, eligible individuals can receive a federal matching contribution of up to 50% on their first $2,000 in annual contributions to workplace retirement plans or IRAs, with a maximum match of $1,000 per tax year. Research shows this program could increase retirement wealth by up to 12% for eligible workers. The impact is even more pronounced for specific demographics, with single women potentially seeing a 13.1% increase, Black Americans 14.6%, and Hispanic Americans 12.1% (source: Morningstar).

Meanwhile, auto portability, powered by the Portability Services Network, addresses another crucial aspect of retirement savings: preserving funds during job changes. This technology automatically transfers small-balance accounts from a former employer's plan to an active account in a new employer's plan. In just its first year, the network has attracted more than 15,000 plans representing approximately 5 million participants. The combination of these two initiatives creates exciting possibilities. Auto portability could efficiently route Saver's Match contributions, reduce administrative burden, and ensure federal matching funds quickly reach participants' active retirement accounts. This partnership could significantly boost participant engagement and improve data accuracy. For frequent job changers, this means their Saver's Match contributions would follow them to their new employer's plan, maintaining continuous retirement savings. The dual benefit of enhanced contributions and reduced cash-out leakage helps maintain higher account balances, keeping retirement assets appropriately invested for the long term.

As we look toward the 2027 launch of the Saver's Match, the retirement industry must prepare for implementation challenges. Success will require broad cooperation among plan sponsors, recordkeepers, and financial institutions. Together, these initiatives represent a significant step forward in creating a more inclusive and effective retirement savings system for all Americans.

Back