News

Small 401(k) Balances Remain at Risk Despite Progress on Auto Portability

401kTV's Fred Barstein examines recent research on traditional safe harbor IRAs, revealing ongoing problems with disengaged accountholders. The article highlights encouraging progress for Portability Services Network (PSN) and auto portability, showing that the program is significantly reducing retirement savings leakage when workers change jobs. In Vanguard plans participating in PSN, cash-out rates for departing employees with balances under $1,000 fell from roughly 50% to just 9%, demonstrating the effectiveness of automatically preserving retirement assets. While broader industry adoption and participant matching remain challenges, the story underscores that auto portability is already helping keep more Americans connected to their retirement savings and has the potential to deliver even greater results as participation expands.

Small 401(k) balances erode after job changes, new research shows

InvestmentNews Senior Journalist Leo Almazora examines new research from Vanguard that examines early-stage auto portability results as well as a report produced by PensionBee on the number of safe harbor IRAs. Almazora notes Vanguard's finding that auto portability has had a significant, positive effect on reducing cashout leakage, but that account matching lags as the Portability Services Network continues to add plan sponsors.

Don’t Let a Forgotten 401(k) Shrink Your Future

Craig Copeland, Ph.D., Director of Wealth Benefits Research at the Employee Benefit Research Institute, is interviewed by Broadcast Retirement News (BRN) anchor Jeff Snyder, to discuss EBRI's latest research on the growing volume of safe harbor IRAs. Copeland estimates there to be from 10-20 million safe harbor IRA accounts, amounting to roughly $30 billion in assets, which typically earn very little investment return, while being subject to ongoing administrative fees. To address the problem, Copeland, referencing the Portability Services Network (PSN), states: "there is [an] auto portability program that’s been established and...is available to be used through this process. And it has to go through the IRA and, and then there’s....a network of record keepers that can join to make this a fully automated process."

Also featured in AOL.com and MSN Money

The Pension Protection Act at 20: Defaults Built for a Job You Keep

In his 20th anniversary review of the Pension Protection Act, Jack VanDerhei, Director, Morningstar Center for Retirement & Policy Studies, argues that automatic enrollment and escalation transformed retirement saving by making participation and increasing contribution rates the default experience for workers. The article highlights auto portability as an important extension of that default-based approach. By automatically moving small retirement accounts from a former employer's plan into a worker's active plan, auto portability helps reduce cashout leakage and preserve savings continuity across job changes. VanDerhei suggests the next evolution may be making contribution rates portable as well, allowing retirement-saving momentum to follow workers from one job to the next.

Automatic 401(k) rollovers reduce cash-outs, research finds — but few accounts reach new employer plans

CNBC personal finance reporter Sarah Agostino examines auto portability (as delivered by the Portability Services Network), citing recent research from Vanguard showing that auto portability reduces cashout leakage. Agostino turns to RCH's Steve Holman, SVP, PSN Strategy and Development to provide context as auto portability adoption continues to expand. Holman explains that "there have been 53,118 completed transactions, totaling $71.3 million in assets transferred from a previous employer plan to a new employer plan via auto portability."

4 reasons defined contribution recordkeepers adopt auto portability

Writing in BenefitsPRO, Steve Holman, SVP of PSN Strategy & Development, lays out the case for auto portability from the perspective of defined contribution recordkeepers. Holman identifies four important reasons why auto portability is beneficial, including 1) delivering a positive ROI, 2) differentiating their value proposition, 3) industry collaboration & reciprocity and 4) strengthening the DC system by addressing the small account problem at scale. “Auto portability” concludes Holman, “is not simply an operational enhancement – it is a foundational capability for the future of defined contribution plans.”

Previously featured in RCH's Consolidation Corner

Industry Demonstrates Need for Better Retirement Savings Rollover Support for Job Changers

PLANSPONSOR's Emily Boyle addresses recent research from Empower (The Retirement Drift) which lays out their analysis of “left-behind” fragmented accounts and the mobile workforce. Boyle also highlights recent research from Vanguard (Does Portability Services Network preserve retirement savings? Early evidence) which analyzes early results from PSN Auto Portability, indicating that "auto portability through PSN significantly cut cashout rates for balances of less than $1,000 from about 50% to approximately 9%."

Also featured in PlanAdviser

Retirement savings are drifting across old jobs

Retirement industry titan Empower releases a new survey ("The Retirement Drift") which lays out their analysis of “left-behind” fragmented accounts and the mobile workforce. According to their survey, 34% of Americans believe they may have lost track of retirement savings from a previous employer, while 39% have assets spread across multiple employer accounts. Younger workers report the greatest difficulty, with 50% of Gen Z and 45% of Millennials saying they may have lost track of retirement assets. The article cites the Portability Services Network and auto portability as helping move forward and consolidate small-balance (<$7000) accounts following a job change.