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Consolidation Corner Blog
Consolidation Corner is the Retirement Clearinghouse (RCH) blog, and features the latest articles and bylines from our executives, addressing important retirement savings portability topics.
The Tragicomedy of Cashout Leakage
In his 8/11/20 article in RCH’s Consolidation Corner, RCH’s Tom Hawkins characterizes the phenomenon of cashout leakage as a “tragicomedy” – incorporating aspects of both a tragedy and a comedy, but ultimately delivering a happy ending. While cashout leakage represents an ongoing tragedy, the term itself is goofy, and tough to take seriously, asserts Hawkins. However, recent events indicate that the widespread adoption of auto portability will finally deliver a happy ending to the problem.
How to Mitigate COVID-19’s Potentially Catastrophic Impact on Americans’ Retirement Readiness
Writing in RCH's Consolidation Corner blog, RCH President & CEO Spencer Williams addresses the urgent need to mitigate the impact of COVID-19 on Americans' retirement readiness. Williams observes that the surge in pandemic-driven unemployment, the relaxed restrictions on withdrawals, along with a pre-existing propensity to cash out -- spells trouble for retirement security. To help address the growing threat, Williams urges sponsors and recordkeepers to adopt auto portability, which he states will "discourage participants from cashing out, but also eliminate the need for automatic cash-outs."
Closing the Coming COVID-19 Retirement Savings Gap
Writing in Consolidation Corner, RCH’s Tom Hawkins foresees the emergence of a COVID-19 retirement savings gap, driven by unprecedented levels of terminated participants and relaxed penalties on withdrawals. To address the problem, Hawkins calls upon the private sector to embrace solutions that will begin to close the gap, stem cashout leakage and deliver ongoing benefits that will extend well beyond the current crisis.
Alight Solutions to Lead Nationwide Launch of Auto Portability
In a press release issued Tuesday, July 14th, Retirement Clearinghouse (RCH) announced that Alight Solutions will lead the nationwide launch of the RCH Auto Portability program.
401(k) Cashout Leakage: A Reality, Not a “Narrative”
In his latest article in Consolidation Corner, RCH's Tom Hawkins provides his take on the topic of 401(k) cashout leakage, examining a recent study by the Investment Company Institute (ICI). Hawkins writes that the ICI study -- while using an innovative approach to mine 2010 tax data -- fell short in providing accurate or timely estimates of 401(k) cashout leakage levels, which are best-reflected in research conducted by EBRI, by large recordkeepers and summarized by the Savings Preservation Working Group.
COVID-19 Pandemic Demonstrates the Need for Institutionalized Portability
Writing in Consolidation Corner, RCH President & CEO Spencer Williams examines the disruptive effects of the COVID-19 pandemic on America's retirement savers, and makes a persuasive case for the systemic, institutional adoption of auto portability as a means to help rebuild and to preserve retirement savings over the long-term. In the near-term, Williams observes that reduced participant mobility make this an opportune time for sponsors to update participant addresses.
A Critical Time to Protect the Vulnerable
Writing in Consolidation Corner, RCH's Tom Hawkins addresses the need to protect newly-terminated, vulnerable participants during the COVID-19 crisis. Hawkins points out that these participants are particularly vulnerable to financial emergencies, or in many cases, simply to poor decision-making. Hawkins urges sponsors to take additional steps to listen, to educate and to protect these participants -- not only during the crisis, but beyond.
Let’s Extend the Spirit of the CARES Act to Automatic Rollover IRAs
In light of the COVID-19 crisis, RCH's Tom Hawkins examines another burden borne by millions of participants, when they’re furloughed or laid off and become subject to ‘traditional’ automatic rollover IRAs – where they’ll likely face high levels of cashouts, predatory fees and barriers to exit. Now, more than ever, it’s important for sponsors to act and to redress this burden. For sponsors utilizing traditional automatic rollover IRAs, Hawkins urges them to demonstrate their caring through three actions that will help address the problem and will deliver significant societal benefit.
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