New EBRI Research Estimates Potential for $2T in Additional Retirement Savings from Auto Portability

CHARLOTTE, N.C.—April 5, 2017—The Employee Benefit Research Institute (EBRI) estimates that the current and coming generations of retirement savers would have an additional $2 trillion, in today’s dollars, at age 65 if auto portability is fully implemented. The extra dollars would be the result of preserving assets that are currently leaking out of plans due to workers cashing out their 401(k) accounts when changing jobs. These findings are a product of EBRI’s Retirement Security Projection Model®, which was used to create an ‘auto portability scenario’ in which every participant consolidates their savings in their new employer plan every time they change jobs, i.e. all participants arrive at age 65 with one account and leakage is limited to hardship withdrawals. The institute’s latest research underscores the value of auto portability as a solution for helping to bridge the U.S. retirement savings shortfall.

Jack VanDerhei, Research Director at EBRI, presented these findings at “Retirement Plan Portability & Public Policy: Unlocking the Potential in Portability,” a forum hosted by the Financial Services Roundtable on March 30, 2017 in Washington, D.C.

The presentations from Mr. VanDerhei and the event’s other speakers are available at:

“Auto portability is needed now more than ever to help tens of millions of hardworking Americans improve their retirement-readiness,” said Spencer Williams, President and CEO of Retirement Clearinghouse, who also spoke at the forum. “Leading industry organizations and government officials are beginning to recognize that auto portability, which can be readily adopted by plan sponsors with minimal effort, is critical for plugging cash-out leakage from the 401(k) system and preserving savings already set aside for retirement—particularly for low-income and younger workers.”

Auto portability ( is the routine, standardized and automated movement of a retirement plan participant’s 401(k) savings account from their former employer’s plan to an active account in their current employer’s plan. The solution is designed to work within the existing platforms and data flows of the country’s qualified 401(k) plan system. Auto portability was conceived and developed by Retirement Clearinghouse to meet the needs of participants with small account balances that lack access to the portability solutions afforded to larger accounts.

EBRI’s ’auto portability scenario’ also indicates that:

  • If all participants with less than $5,000 (indexed for inflation) in their 401(k) savings accounts would be subject to auto portability when they change jobs, they would have an additional $1.5 trillion in retirement savings (in today’s dollars) when they reach age 65.
  • The retirement deficit for Americans between ages 35 and 39 would be reduced by 20% if auto portability would be fully implemented. By way of comparison, the auto IRA programs proposed by the prior White House administration would result in only 10.6% RSS reduction.
  • Americans between ages 25 and 34—across all income brackets—would experience the largest percentage increase in savings at age 65, compared to their older counterparts. The biggest increase in savings would be experienced by workers aged 25 to 34 in the lowest income bracket.

“The simulated effects of auto portability on the ability of Americans to grow their savings for retirement are impressive,” said Mr. VanDerhei. “Our findings underscore the important role auto portability can play in helping to close the retirement savings shortfall in the U.S.”

Former Senator Kent Conrad (D-N.D.), Co-Chair of the Bipartisan Policy Center’s Commission on Retirement Security and Personal Savings, delivered a presentation at the forum which discussed initiatives that would address the U.S. retirement crisis, including Social Security reform and retirement plan leakage reduction. In June 2016, the Bipartisan Policy Center’s commission recommended the establishment of a nationwide private-sector retirement security clearinghouse to enable plan participants to easily move retirement savings account balances as they change jobs.

Other forum speakers included Stephen M. Saxon, Principal and Chairman of Groom Law Group, who updated attendees on the legal path forward to enable the widespread and rapid adoption of auto portability.