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Auto Portability - Public Policy
Learn more about retirement savings public policy positions related to Auto Portability.
Robert L. Johnson, Founder and Chairman of The RLJ Companies and majority owner of Retirement Clearinghouse (RCH), has secured endorsements for auto portability from two premier civil rights organizations – the National Urban League, and the National Association for the Advancement of Colored People (NAACP) – both with over a century of experience advocating for solutions that address the inequities and economic challenges experienced by Black Americans and by other communities of color. Writing in 401k Specialist, RCH's Renée Wilder Guerin, Executive Vice President, Public Policy, summarizes these major developments.
Alicia Munnell, director of the Center for Retirement Research at Boston College and writing in MarketWatch, examines the phenomenon of 401(k) leakage, and considers the balancing act between preserving savings for retirement, vs. allowing access to savings for participants who need their money. Munnell identifies the "really annoying and large source of leakage is people cashing out when they change jobs" and, in an ideal world, would prefer to "prohibit cashing out at job changes entirely." More practically, Munnell suggests that RCH's auto portability program, "a platform for automatically transferring balances under $5,000 from an old plan to a new plan" could coexist with "a system with standardized forms and procedures for balances of all sizes."
Writing in 401k Specialist, RCH's Tom Hawkins offers an optimistic assessment of the prospects for auto portability. Hawkins, a self-confessed "long-time, unabashed proponent" of auto portability, has recently concluded that the feature's eventual, widespread adoption is "inevitable" and supports his position with four key points.
In a publication released 1/6/2022 as part of the Aspen Institute's Financial Security Program, the 2021 Aspen Leadership Forum on Retirement Savings Report is a summary of the April 2021 Aspen Leadership Forum on Retirement Savings. The Forum's report devotes a page to "Six Stats That Tell the Portability Story" which notes the propensity of American workers to change jobs and to cash out. It also mentions two compelling statistics: 1) that 85% of participants like the idea of automatic portability and 2) that 57% of retirement experts supported a government mandate for auto portability, while almost half (48%) believed that automatic portability was feasible without such a mandate.
Writing in Employee Benefit News, RCH President & CEO Spencer Williams marks the 15th anniversary of the Pension Protection Act (PPA) and offers his views on the unintended consequences of that legislation. Acknowledging that the automatic enrollment feature has been successful in increasing plan participation, Williams notes that the feature also resulted in a “sharp uptick in small, stranded 401(k) savings accounts” that – absent easy plan-to-plan asset portability – has led to increased participant fees as well as higher levels of cash outs. In response, Williams observes that “the private and public sectors have worked together to create solutions” such as auto portability, which can help rectify the PPA’s flaws, and allow Americans to save more for retirement.
On 12/6/21, Kathleen Kennedy Townsend, Special Assistant to the Secretary of Labor for Retirement, served as the keynote speaker at EBRI's 90th Public Policy Forum, and outlined the big-picture, retirement-focused priorities of the DOL. One of the DOL's three priorities is the issue of portability and leakage. Writing in 401k Specialist, RCH's Tom Hawkins examines Townsend's remarks to her EBRI audience, which revealed that she has a clear grasp of the magnitude of the cashout leakage problem, as well as its most-promising solution – enabling plan-to-plan portability.
Writing in the print edition of 401k Specialist Magazine, Managing Editor Brian Anderson examines the growing concern over the phenomenon known as the 'Great Resignation' and its highly negative, potential impact on the retirement security of millions of job-changing Americans. After examining the problem, Anderson identifies auto portability as the 'antidote' to the Great Resignation -- quoting a prior piece by RCH's Tom Hawkins that stated: "No other program or public policy option even comes close, including the proposed establishment of a retirement savings 'lost and found.'"
On 12/6/21, Kathleen Kennedy Townsend, Special Assistant to the Secretary of Labor for Retirement, served as the keynote speaker at EBRI's 90th Public Policy Forum, and outlined the big-picture, retirement-focused priorities of the DOL. One of the DOL's three priorities is the issue of portability and leakage. RCH's Tom Hawkins examines Townsend's remarks to her EBRI audience, which revealed that she has a clear grasp of the magnitude of the cashout leakage problem, as well as its most-promising solution – enabling plan-to-plan portability.