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Retirement Clearinghouse in the News
Find news articles referencing RCH and our services, including Auto Portability
In Broadcast Retirement News' segment #1257, anchor Jeff Snyder interviews Laura Quinsby, Center for Retirement Research, Boston College. The segment focuses on recent developments that will allow terminated participants to better track and consolidate their retirement savings, including the new SECURE 2.0-mandated lost-and-found registry, as well as auto portability. Snyder mentions the formation of the auto portability "consortium" or the Portability Services Network (PSN) as a positive development, while Quinsby opines that one indicator of auto portability's success will be an eventual decline in the number of terminated, vested defined contribution accounts, brought about by account consolidation.
PLANSPONSOR's Remy Samuels examined recent research on 401(k) cashout leakage, published in Marketing Science and the Harvard Business Journal, and turns to co-author John G. Lynch, Jr., who provides his support for both auto portability and the Portability Services Network. Samuels writes that Lynch "encourages more recordkeepers to join the Portability Services Network, which would enable employees with smaller balances to roll over 401(k), 401(a), 403(b) and 457 accounts to a new employer’s plans as they change jobs." Referencing plan sponsors, Lynch also pointedly adds: “if the employer really cares about their employees, they should care about them when they’re on the way out the door as well.”
Writing in WealthManagement.com, Fred Barstein predicts that 401(k) and 403(b) plans must "fundamentally transform into something few could have envisioned just 10 years ago, driven by three societal pressures." Barstein goes on to cite the Portability Services Network (PSN) and auto portability, writing: "firms like the Portability Services Network, the first cooperative industry data exchange, driven in part by SECURE 2.0, offer the real hope of helping people consolidate the plans they accumulate over their careers."
Fred Barstein, in the 55th episode of his recurring 401(k) Real Talk series, addresses the most timely and important developments in the 401(k) industry. As his lead-off topic, Barstein notes the 4/4/23 announcement by TIAA that it is joining the Portability Services Network (PSN). Barstein states: "with 62.6 million workers now in the network, and with other providers expected to join, helping a mobile workforce find and consolidate DC accounts is no longer a pipe dream."
Also: Link to YouTube video cued to Barstein's comments at 00:36
Writing in Kiplinger's Money Power, senior editor Sandra Block examines the plight of job-changing 401(k) participants, who either cash out or strand millions of retirement accounts, and identifies auto portability -- delivered via the Portability Services Network -- as a promising solution. Describing how auto portability will work, Block cites Steve Holman, a principal in Vanguard’s Institutional Investor Group, and Greg Long, head of public policy for Alight Solutions.
NAPA Net's John Sullivan delves into recent cashout leakage research that finds a correlation between more-generous employer matching contributions and higher incidences of leakage. Sullivan also examines auto portability, turning to RCH president & CEO Spencer Williams, who addresses the Portability Services Network (PSN), a newly-formed "independent entity that acts as a utility" to foster adoption of the new automatic feature. Williams provides updates on PSN's recordkeeper membership, and states: "[w]e expect to have the beginnings of reportable activity by the end of the year.”
The 401kWire's Neil Anderson interviews TIAA spokesperson Lizzie Anderson, who explains why TIAA elected to join the Portability Services Network as the fifth recordkeeping member. Anderson placed the move in the context of closing the retirement savings gap, and indicated that "this industry consortium enabling auto portability is an important step toward helping more Americans hold on to their money during their professional journeys." Anderson also cited EBRI and RCH data indicating the prevalence of job-changing and the lack of seamless plan-to-plan savings portability as key factors driving the need for auto portability.
Lynnley Browning, managing editor of Financial-Planning.com, writes about the "new retirement crisis" represented by surging cashout leakage. Browning cites data from the Savings Preservation Working Group, from EBRI and from Retirement Clearinghouse to give readers a sense of the magnitude of the problem, where "[m]illions of Americans are paying billions of dollars a year in taxes by cashing out their 401(k) accounts as they change jobs, an immediate financial hit that sets them up for leaner times in retirement." Browning goes on to cite recent Fidelity research identifying a "danger zone" of cashouts between ages 30-39, and notes the recent formation of the Portability Services Network, focused on the nationwide implementation of auto portability.
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