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Auto Portability - Public Policy
Learn more about retirement savings public policy positions related to Auto Portability.
PRESS RELEASE: Bipartisan Legislation Introduced to Preserve Retirement Savings by Expanding Auto Portability
CHARLOTTE, N.C.—June 15, 2022—Robert L. Johnson, Founder and Chairman of The RLJ Companies and Chairman of Retirement Clearinghouse, LLC, applauds Senator Tim Scott (R-S.C.) and Senator Sherrod Brown (D-Ohio) for the introduction of the Advancing Auto Portability Act of 2022. The U.S. Senate legislation has the potential to preserve up to $1.5 trillion in retirement savings for the next generation of workers by encouraging auto portability. With auto portability, a participant’s 401(k) account can follow them as they change jobs, making it less likely that people prematurely cash-out their savings and improving retirement security.
RCH's Tom Hawkins, writing in 401k Specialist, offers his view that state-sponsored auto-IRA programs, despite their potential size and strength, suffer from an obvious weakness, or "Achilles’ heel": a lack of retirement savings portability. Hawkins writes: "Without addressing their portability problem, auto-IRA programs could expand, but may never reach their full potential, housing large numbers of churning, small-balance accounts. However, with adequate support for portability both into and out of these programs, they could dramatically increase the odds that they deliver on their promise of building incremental retirement wealth for millions of Americans."
Writing in 401k Specialist, RCH's Tom Hawkins digs into EBRI's 2022 Retirement Confidence Survey (RCS), locating an interesting and valuable finding not referenced in the organization’s initial report, officially released to the public on Thursday, April 28th. In an excerpt of a report available to survey partners, the survey found that a plurality of job-changing 401(k) plan participants favor automatic plan-to-plan portability over consolidating their savings to an IRA, or to leaving their savings behind in their former employer’s plan. This result comes on the heels of EBRI’s 2021 survey, which found that nearly 9 in 10 participants believed that auto portability would be valuable to them. Hawkins adds that "others -- including the Department of Labor – could find 401(k) participants’ strong preference for plan-to-plan portability compelling."
Writing in 401k Specialist, RCH’s Tom Hawkins opines on pending legislation that seeks to expand access for under-served and under-saved demographic segments, but may fall short if it fails to incorporate measures that minimize cashout leakage. Noting that SECURE 2.0’s expanded access provisions seek to benefit women, minorities and lower-income workers – the same demographic segments that cash out their small balance savings at disproportionate rates – Hawkins suggests that legislators consider inclusion of measures that would “spur more rapid adoption” of auto portability “by codifying into law the guidance issued by the Department of Labor and by creating modest tax incentives to encourage more early adoption of the feature.”
Writing in their Research Minute blog, the DCIIA Retirement Research Center recaps a presentation by David John, senior strategic policy advisor at AARP, at their March 2022 RRC Summit. John shared current and ongoing research on retirement rollovers and the problem of plan leakage, including voicing his support for "supporting 'automatic portability' rollovers between employer plans when employees change jobs."
Writing in 401k Specialist Magazine, Renée Wilder Guerin, RCH’s EVP of Public Policy, examines the 3/29/22 hearing held by the U.S. Senate Committee on Health, Education, Labor & Pensions (HELP), which focused on solutions that would enhance retirement security for Americans, particularly those who are under-served and under-saved. Two of the four witnesses, WISER’s Cindy Hounsell and The Aspen Institute’s Ida Rademacher offered testimony highlighting the benefits of auto portability in leveling the playing field for women, minorities, and lower income workers. The latest hearing, writes Wilder Guerin “builds on previous Senate hearings and fuels growing momentum for auto portability among legislators, policymakers, advocacy groups, providers and plan sponsors.”
PSCA's Executive Report provides its plan sponsor membership with highlights from the 3/29/22 U.S. Senate HELP Committee's hearing on improving retirement security. The hearing featured testimony from Cindy Hounsell, President and Founder of the Women’s Institute for a Secure Retirement (WISER), and Ida Rademacher (The Aspen Institute), who both addressed the need for improved retirement savings portability. Hounsell's testimony referenced three interventions that could help, including "auto-portability to help prevent workers who change jobs from cashing out their retirement savings. "
NAPA Net's Ted Godbout covers the 3/29/22 U.S. Senate HELP Committee's hearing on improving retirement security. The hearing featured testimony from Cindy Hounsell, President and Founder of the Women’s Institute for a Secure Retirement (WISER), and Ida Rademacher (The Aspen Institute), who both addressed the need for enhanced retirement savings portability. Hounsell's testimony referenced three interventions that could help, including "auto-portability to help prevent workers who change jobs from cashing out their retirement savings. "