News

Supreme Court ruling highlights an expansive definition of plan fiduciary

Writing in BenefitsPro, RCH President & CEO Spencer Williams examines the U.S. Supreme Court's recent Hughes v. Northwestern University ruling, which underscored the need for plan sponsors to err on the side of more rather than less, when considering the scope of their fiduciary responsibilities. While the case focused on high-cost investment options, Williams suggests that the ruling could expose plan sponsors to fiduciary risk for decisions that produce unnecessarily high levels of cash-out leakage, a risk that could be avoided if plan sponsors were to proactively adopt asset portability solutions, such as auto portability.

Why Account Consolidation is Vital to Reduce 401k Cybersecurity Risk

Writing in 401k Specialist, Retirement Clearinghouse EVP & Chief Operating Officer Ricki Ingalls makes the case for consolidation as a means to reduce cybersecurity risks for the 401(k) system. Appealing to common sense, Ingalls notes that “fraud starts small” and that consolidation of small balance 401(k) accounts achieved via auto portability can effectively minimize the cyber “attack surface” these excess accounts represent. Ingalls continues by describing the robust cybersecurity features that have been incorporated into auto portability.

The Full View: The merits of pulling in participants’ external financial information.

PlanAdviser's John Manganaro addresses issues facing job-changing retirement plan participants, and the role financial technology can play in creating better outcomes. Manganaro turns to David Stinnett, principal and head of Vanguard Strategic Retirement Consulting, who identifies cashing out as the "most problematic outcome." Manganaro writes that Vanguard "is now working with Retirement Clearinghouse (RCH) to provide plan sponsors with a new portability solution meant to simplify making small-balance 401(k) rollovers" -- adding that "once operational, the automatic portability program will be able to facilitate the movement of an employee’s 401(k) savings account from a former employer’s plan into an active account with the current employer."

Toward a Sustainable and ‘Greener’ 401k System

Writing in 401k Specialist, RCH’s Tom Hawkins reacts to the DOL’s 2/14/22 Request for Information (RFI) seeking comment on ways to “protect life savings and pensions from threats of climate-related financial risk.” Hawkins contends that our retirement system itself has significant sustainability problems that are more financially material to future retirees than climate change. Hawkins urges action to address the 401(k) system’s inefficiency and waste, which could “produce more of the ‘green’ that will matter to future retirees.” Hawkins notes the findings of a recent Brookings Institution report on the problem of small retirement accounts, which recommends improvements in “combining accounts” and includes support for auto portability.

Long Overdue, Pension Auto Portability Is Coming

Writing in the Pension Research Council's (Wharton School, Univ. of Pennsylvania) RetireSecure Blog, Michael Kreps of the Groom Law Group offers his considered view on auto portability, which Kreps believes "is likely to have an enormous impact on the US retirement system" by reducing cashout leakage and consolidating retirement savings. In the piece, Kreps cites a variety of industry statistics and projections, concluding that auto portability "will undoubtedly preserve many small accounts, making retirement more secure for millions of people."

How to Improve Retirement Readiness in Under-represented Groups

NAPA Net's Ted Godbout reviews the latest research report from Alight Solutions, entitled "Improving Retirement Readiness for Underrepresented Groups." Reporting on Alight's findings, Godbout highlights the six steps that Alight offers plan sponsors to increase retirement savings for historically under-represented groups. As one of those steps, Alight advises sponsors that "implementing auto-portability can help reduce the number of automatic cash-outs that occur when people change employers" and that auto portability's impact is "most profound for marginalized groups."

How to find lost retirement accounts

Writing in Yahoo! Money, journalist Kerry Hannon takes stock of the problem facing millions of Americans, whose old employer-sponsored retirement accounts may have been left behind following a job change. Hannon reports that private businesses, such as Retirement Clearinghouse have "jumped in to solve the problem" by providing auto portability, which "automatically moves a departing employee’s 401(k) savings funds from the previous employer’s plan to their new employer’s plan, even if their assets are less than $5,000." Hannon also notes that "Vanguard, the mega mutual fund firm, plans to launch the Retirement Clearinghouse’s auto portability program for 401(k) sponsor clients and their participants in mid-2022.

Improving retirement readiness for underrepresented groups

Alight Solutions has released a new research report, entitled "Improving Retirement Readiness for Underrepresented Groups." The new paper identifies six key actions that plan sponsors can undertake to boost retirement savings for historically under-represented groups. In one of those actions, Alight advises employers that "implementing auto-portability can help reduce the number of automatic cash-outs that occur when people change employers" and that auto portability's impact is "most profound for marginalized groups."

Direct link to report (PDF format)