News

Rapid Change, Real Momentum: Assessing America’s Progress Toward Inclusive Retirement Savings

In October 2022, policymakers, financial services executives, academics, advocacy leaders, and financial technology innovators gathered for the sixth annual Aspen Leadership Forum on Retirement Savings. An in-person event for the first time since early 2020, this Forum set out to advance solutions to ensure that everyone in America can benefit from our retirement savings system. The just-released report from that meeting identifies retirement plan portability as vital to addressing the problem of job-changing and cashout leakage, and the report heaps superlatives on the newly-formed Portability Services Network, an industry-led consortium dedicated to the adoption of auto portability.

How Employers Can Address the Nurse Retention Problem

PLANSPONSOR's Remy Samuels takes on the issue of nurse retention, which is a big problem in the healthcare services industry -- where high levels of job-changing can lead to financial problems, including excessive cashout leakage. Samuels turns to Fidelity EVP Sangeeta Moorjani, who identifies components of SECURE 2.0 that may help alleviate the problem, including auto portability. SECURE 2.0 allows healthcare plan providers to offer auto portability, which will automatically transfer retirement accounts from plan-to-plan, which is "particularly beneficial for nurses with low retirement account balances." Moorjani adds: "[i]f you’ve saved [for retirement] at one hospital and you move to another hospital with a different plan sponsor, those savings travel with you."

Are automatic rollovers the way of the future?

Retirement reporter Nathan Place, writing in Employee Benefit News, suggests that auto portability could represent a solution to "botched" 401(k) rollovers, which "are a major stumbling block for retirement savings." Since auto portability is a default, automated process, "you don't have to take any action" states Yanwen Wang, a co-author of a recent cashout leakage study. Place goes on to describe the new Portability Services Network, an industry-led utility formed by leading recordkeepers, along with Retirement Clearinghouse (RCH). Place turns to two Vanguard experts for their views -- including Dave Stinnett, head of strategic retirement consulting, and Steve Holman, head of the institutional investor group.

Also featured in Financial-Planning.com

This simple way to fix the wealth gap between Blacks and Whites is far better than reparations

Fox News Senior Political Analyst Juan Williams, prominently featured on live network TV, writes a FoxNews.com opinion piece, where he profiles entrepreneur Robert L. (Bob) Johnson's "better idea" for closing the racial wealth gap -- auto portability. Williams heaps praise upon Johnson and auto portability, which was brought into existence following Johnson's hire of "a veteran retirement industry executive, Spencer Williams, to create the structure for seamless transfer of 401(k) accounts." In the piece, Williams characterizes auto portability as being able "to increase Black wealth through current economic rules instead of placing distant hope in some day seeing reparations."

Also featured in MSN Money

Cashout Leakage Alert: Highway Through the ‘Danger Zone’

Writing in 401k Specialist, RCH's Tom Hawkins notes that the issue of 401(k) cashout leakage is "once again in the news, with the publication of an alarming study by academics, as well as new data from Fidelity Investments." Hawkins goes on to cite "compelling real-world data that supports the efficacy of retirement savings portability in dramatically reducing unnecessary cashout leakage" -- representing "a much-needed highway through the ‘danger zone’ of unnecessary cashout leakage, increasing retirement security for millions of job-changing 401(k) participants."

'Something has to be done'

Moneywise.com's Bethan Moorcraft joins a growing list of journalists reacting to the cashout leakage study published by academics affiliated with the UBC Sauder School of Business. According to Moorcraft, the study (Cashing Out Retirement Savings at Job Separation) finds that "just over 2-in-5 (41.4%) of employees are choosing to cash out their defined contribution 401(k) plans early" -- which she characterizes as a "shocking mistake." Moorcraft goes in-depth into the study's findings, interviewing UBC Sauder Associate Professor and study co-author Yanwen Wang, who states: “something has to be done — not to control people’s 401(k)s, but to provide enough knowledge so they’re aware of the consequences of their actions.” Moorcraft's piece also links to earlier RCH content on the fundamentals of cashout leakage.

Also featured in Yahoo! Finance and Canada Today

Broadcast Retirement News: Set It and Actually Forget It

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.

Increased Cashouts at Job Separation Highlight Need for Auto-Portability

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.”