Media Coverage

Job Changes Could Cost You $300K in Retirement Savings

Mary Helen Gillespie, writing in TheStreet, covers research recently released by Vanguard, revealing "that frequent job changes can lead to significant retirement savings losses" when job-changers' savings rates decline. Gillespie notes that the Vanguard study advocates investigating "the expansion of automatic portability via the Portability Services Network to include additional data feeds regarding the participant’s saving rate at their prior employer. This also could enable savings elections to transfer from plan to plan without participant engagement."

Pointers For Maximizing Clients' 401(k) Contributions

Writing in Financial Advisor, Ben Mattlin examines approaches for maximizing clients' 401(k) contributions. Mattlin notes that "job-hoppers" can often experience decreased savings rates following a job change, and quotes Vanguard's Kelly Hahn, head of retirement research at the firm. Mattlin cites Vanguard research that -- referencing auto portability -- advocates for "tech-enabled solutions such as the utility offered by the Portability Services Network, which uses a digital hub from the Retirement Clearinghouse that connects plan record-keepers with plan sponsors nationwide."

What You NEED to Know About Auto Portability: ASPPA Annual 2024

Reporting from the 2024 ASPPA Annual Conference, ARA's John Sullivan recaps a breakfast session, where Fidelity Investments’ TPA Programs Director Beth Robinson offered her perspective on auto portability, as delivered by the Portability Services Network. Robinson addressed the problems of cashout leakage, frequent job-changes and systemic friction that stand in the way of preserving small balances, a problem that disproportionately affects underserved and under-saved demographics. Robinson also offered attendees a primer on how auto portability works, including participant communications and the subsequent commencement of network locate-and-match processes.

Also featured in NAPA Net and in PSCA News

ERISA’s Golden Anniversary has Set the Stage for Helping Future Generations Improve Their Retirement Outcomes—in 2025 & Beyond

Writing in the Consolidation Corner blog Retirement Clearinghouse (RCH) and Portability Services Network (PSN) President & CEO Spencer Williams looks to the past and has his eye on the future, as ERISA celebrates its 50^th anniversary. Williams chronicles key participant-centric technologies that have emerged, including daily valuation, automatic enrollment and target date funds. Looking ahead, Williams points to the most impactful developments, including the formation of the Portability Services Network, which has embraced auto portability, “making it easy for participants to bring their retirement savings with them from job to job until retirement” and “optimiz[ing] what auto enrollment and target-date funds can do for American workers saving for retirement.”

Leakage & Shrinkage: Two Brothers from the Same Mother

Writing in the RCH Consolidation Corner blog, Tom Hawkins compares and contrasts cashout leakage with “shrinkage” – a related phenomenon newly identified by Vanguard in their September 2024 study: Job transitions slow retirement savings. Although the Vanguard study does not specifically use the term “shrinkage” – their study refers to a decline in retirement savings rates that occurs when individuals transition between jobs, leading to sub-optimal retirement outcomes. Hawkins also finds it intriguing that the Vanguard study identifies auto portability as a potential solution for the shrinkage problem, promoting better retirement outcomes for workers.

Job transitions slow retirement savings

New research from the Vanguard Investment Strategy Group finds that the impact on retirement savings from those who switch jobs frequently can be quite significant, and may be contributing to a "substantial slowdown in savings" for job-changers. After providing a quantitative assessment of the problem, the Vanguard research goes on to identify potential solutions, including the establishment of individual default savings rates, which the reports states could "involve the expansion of automatic portability via the Portability Services Network to include additional data feeds regarding the participant’s saving rate at their prior employer. This could enable savings elections to transfer from plan to plan without participant engagement."

Link to full report

4 Compelling Reasons for Plan Sponsors to Adopt Auto Portability

Writing in 401k Specialist, RCH's Tom Hawkins offers plan sponsors four compelling reasons to adopt auto portability. Hawkins cites the groundswell of support that auto portability has already received from the retirement industry, from legislators and regulators, as well as the thousands of plan sponsors who have already adopted, advising plan sponsors that they need not fear "being first" when they adopt. By adopting, they'll be acting in their plan's best interests and in the interests of its participants, who've expressed a strong desire for the new feature.

Safe-harbor IRAs don't offer a long-term saving solution

Writing in Employee Benefit News, RCH and PSN President & CEO Spencer Williams reflects on the 20-year history of safe harbor IRAs, which were intended to be "a temporary solution to the problem of too many small, stranded accounts in defined contribution plans." Williams provides readers with examples of the dysfunction that has occurred when safe harbor IRAs have failed to act as long-term repositories of savings, or worse, when participants cash out completely. With the advent of auto portability, Williams maintains that the new auto feature will "allow participants to maximize the time retirement savings are invested in their plan accounts—and minimize the time those balances are languishing in underperforming safe-harbor IRAs along the journey to retirement."