TRANSCRIPT:

Tom Hawkins: Welcome to episode 28 of the RCH Consolidation Corner Channel, where we provide audio content that explores key issues in the preservation and consolidation of retirement savings. In this episode, we examine ongoing developments associated with plan sponsor adoption of auto portability – namely, the trend towards larger plans adopting the feature. We hope you’ll find the audio enjoyable and informative.

NARRATOR: For years, one of the most persistent challenges in the U.S. retirement system has been cashout leakage – when workers change jobs and withdraw small retirement balances instead of preserving them for the future.

An innovation designed to address that challenge, auto portability, has been steadily gaining momentum. And today, auto portability has reached an important turning point. Larger 401(k) plans – traditionally cautious, highly scrutinized, and slow to adopt unproven features – are now embracing auto portability in meaningful numbers. That shift signals something important: confidence has been earned.

Auto portability, delivered through the member recordkeepers of the Portability Services Network, became operational in late 2023. Early adoption followed a familiar pattern. Smaller and mid-sized plans led the way, testing the model and proving that it could work efficiently and safely.

What’s changed since then is scale.

In 2025, adoption accelerated sharply. Much of that growth was driven by recordkeepers, who began offering auto portability as a built‑in feature within trusted platforms.

One standout example came from Fidelity. In its third-quarter 2025 Retirement Trends report, Fidelity disclosed that approximately 9,200 plans – about one-third of its entire plan sponsor client base – had implemented auto portability. That milestone alone reflects how quickly the concept moved into the mainstream.

But plan counts only tell part of the story. What really matters is participant reach.

While overall plan adoption rose by about 40 percent during 2025, the number of active participants covered by adopting plans grew by 52 percent. That gap is important. It shows that larger plans were stepping off the sidelines.

And that’s significant because large plans don’t experiment lightly. They operate under intense fiduciary oversight, manage complex participant populations, and require high confidence in operational reliability, cybersecurity, and participant protections.

When large plans adopt, it’s because a solution has moved beyond theory and proven its value. That momentum has carried into 2026.

So far this year, the Portability Services Network has seen a notable increase in adoption among plans with 60,000 to 100,000 participants. Industry leaders are openly acknowledging a growing comfort level as auto portability continues to deliver consistent, measurable outcomes.

For larger sponsors, this isn’t about chasing innovation – it’s about confirming readiness. Auto portability has now reached a level of maturity where fiduciary alignment, risk management, and scalability are no longer open questions.

Today, plans that have adopted auto portability represent more than 6.6 million active participants.

Each new plan adds more than just headcount. It strengthens the network itself – improving match rates, increasing connectivity, and enhancing overall system effectiveness. This network effect is one of auto portability’s most powerful yet least discussed advantages: the more widely it’s adopted, the better it works.

Another clear signal of where things are headed came in April 2026, when Retirement Clearinghouse announced the hiring of Steve Holman as Senior Vice President of PSN Strategy and Development. For those familiar with the retirement industry, Holman’s background working with large plan sponsors and service providers speaks volumes. His appointment reinforces the view that auto portability is transitioning from growth phase to long-term infrastructure.

Ultimately, the growing adoption among large plans reflects a simple truth. Auto portability has done what any durable retirement innovation must do – it has earned trust.

Plan sponsors aren’t becoming less cautious. They’re acting exactly as expected once sufficient evidence, operational experience, and governance frameworks are in place.

As this trend continues through 2026 and beyond, auto portability is increasingly positioned not as an optional enhancement – but as a core feature of modern retirement plans.

And that may be its most important milestone yet.

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