Auto Portability Simulation Illustrates a Clear Path to Reducing Leakage from Small-Balance Savings Accounts

CHARLOTTE, N.C.—May 10, 2016—Retirement Clearinghouse, LLC will introduce a first-of-its-kind discrete event simulation at the 78th annual Employee Benefit Research Institute (EBRI) Policy Forum on May 12, 2016. The Auto Portability Simulation (APS) shows that over the course of the next 30 years, widespread adoption of seamless plan-to-plan transfers for small-balance accounts can significantly increase Americans’ retirement prospects by retaining more savings in employer-sponsored plans. The APS seeks to dynamically demonstrate and quantify the value of cutting leakage and incubating savings for small-balance savers.

Spencer Williams, President and CEO of Retirement Clearinghouse, and Dr. Ricki Ingalls, Chair of Computer Information Systems at Texas State University and Principal at Diamond Head Associates, Inc., will present the APS during a session titled “Reducing Leakage & Incubating Savings,” beginning at 12:15 p.m. More information about the Policy Forum is available at The Policy Forum can be viewed via live streaming video at this link, courtesy of the International Foundation of Employee Benefit Plans (

“This dynamic picture of the mobile workforce provides plan record-keepers, plan sponsors and government agencies with a comprehensive, quantitative and visual understanding of the near- and long-term benefits that auto portability will bring to the retirement ecosystem,” said Mr. Williams. “If key stakeholders continue to invest in, and adopt, innovative and scalable technology to facilitate the automatic transfer of small accounts between employer plans at the point of job change, tens of millions of Americans will be better-positioned to enjoy their retirement years.”

Retirement Clearinghouse developed the APS in cooperation with Dr. Ingalls, whose experience in creating simulations spans many industries and whose clients include AB-InBev and Halliburton. Significant research and data contributions to the APS were made by EBRI Research Director Jack VanDerhei, PhD, who undertook customized EBRI research, and Boston Research Technologies CEO Warren Cormier, one of the industry’s premier behavioral finance experts.

“We are glad to have played a key role in providing in-depth, unbiased data for the APS as part of our core function in the retirement system,” said Harry Conaway, President and CEO of EBRI. “We are equally pleased to provide a forum where it can be viewed and discussed for the first time by a variety of retirement service specialists.”

The APS is designed to compare different scenarios over time for the approximately 5 million Americans who change jobs each year and have less than $5,000 in their retirement accounts. The APS illustrates mobile workforce dynamics for the defined contribution system as a whole, and for each major record-keeper, demonstrating the potential for more streamlined operations within their businesses in addition to better outcomes for the small accountholders in the plans they service.

The key scenario—in which auto portability is widely adopted over a 10-year period and remains in force for a generation—shows that small account cash-outs could be reduced by two-thirds from the current annual rate of $7 billion to less than $2.5 billion per year. The APS also demonstrates that auto portability could generate more than $115 billion in new employer-plan savings for the current and next generation of retirement plan participants. In addition, the number of participants annually rolling their under-$5,000 account balance into their new-employer plans would increase from an estimated 200,000 today to more than 3 million per year.

The APS is Retirement Clearinghouse’s latest contribution to the national dialogue about adopting solutions to reduce leakage, improve portability, and keep participants invested in their employer plans for their entire working lives. Since 2014, Retirement Clearinghouse has been engaged in an open and collaborative dialogue with a group of the largest retirement services providers about establishing a utility model that would enable workers to seamlessly and automatically move their 401(k) accounts from employer to employer when they change jobs.

“We look forward to continuing to add to the body of knowledge and depth of understanding that are requisite to adopting solutions that will improve retirement outcomes for America’s mobile workforce,” said Mr. Williams.

Auto Portability Simulation Infographic

PR Newswire