TRANSCRIPT:

Tom Hawkins: Welcome to another edition of the RCH Consolidation Corner Channel, where we provide you with audio content that explores key issues in the preservation and consolidation of retirement savings. In this episode, we will give plan sponsors four compelling reasons why they should adopt auto portability. We hope you’ll find the audio enjoyable and informative.

NARRATOR: It's now clear that auto portability is gaining significant momentum, with thousands of plan sponsors already enrolled in the feature, delivered via the Portability Services Network. For those plan sponsors now considering the adoption of auto portability, here are four compelling reasons to act now.

First, you'll be joining an established movement. The Portability Services Network already represents recordkeepers covering 63% of defined contribution participants, with more on the way. Auto portability was codified into SECURE 2.0 legislation and has undergone thorough regulatory review that clearly defines fiduciary responsibilities and participant protections. With thousands of plan sponsors already on board, you won't be taking an untested path.

Second, auto portability directly benefits your plan. It reduces the number of small-balance accounts from terminated employees, which lowers administrative costs and decreases missing participant issues. It also works with your plan's force-out provisions, helping mitigate uncashed check problems for balances under $1,000. Additionally, when new participants' previous account balances are transferred in, your plan's average balances and total assets increase, potentially reducing plan fees.

Third, auto portability significantly enhances retirement outcomes for participants. Auto portability reduces cashout leakage by over 50% compared to traditional automatic rollover IRAs. It automatically moves funds back into the defined contribution system where they typically default into target date funds rather than the money market funds used in safe harbor IRAs. This particularly benefits traditionally underserved groups including minorities, women, younger workers, and those with lower incomes.

Fourth, participants themselves want this feature. Multiple surveys confirm strong participant preferences for auto portability. A 2018 Boston Research Technologies study found 60% of respondents preferred automated processes for address updates and account consolidation. EBRI’s 2021 Retirement Confidence Survey revealed nearly 9 out of 10 respondents considered auto portability valuable, with even higher appreciation among minorities, younger groups, and lower-income segments. Their follow-on 2022 survey showed most job-changing participants favor automatic plan-to-plan transfers over IRA consolidation or leaving funds with former employers.

The time to adopt auto portability is now. Speak with your recordkeeper about the service, and if they're not already a PSN member, let them know that you'd like them to be. Most importantly, rest assured in the knowledge that auto portability will serve both your plan's interests as well as your participants' financial futures.

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