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Auto Portability - Recent Developments
Find the most-recent auto portability media coverage and developments.
A new Issue Brief released by the Employee Benefit Research Institute (EBRI) examines the impact of the SECURE Act's most important provisions on Americans' retirement security. The EBRI brief projects that the SECURE Act will reduce the nation's $3.81 trillion Retirement Savings Shortfall (RSS) by 3%, or $115 billion. However, when combined with auto portability, the RSS is reduced by 10%, or $383 billion -- a massive, incremental benefit.
The 401(k) cashout leakage crisis has significant, negative societal consequences -- impacting all Americans, but affecting minorities, women and lower-income segments the most. 401(k) plan sponsors, already familiar with Environmental, Social & Governance (ESG) initiatives, could finally be waking up and taking action to solve the cashout leakage problem, within the framework of corporate social responsibility. Plan-to-plan portability -- specifically auto portability -- is the most promising solution, and could become the next 401(k) ESG initiative.
Writing in 401kSpecialist, RCH's Tom Hawkins predicts that socially conscious private-sector corporations will soon address the nation's 401(k) cashout leakage crisis by adopting plan-to-plan portability, including auto portability. Driving Hawkins' conclusions are three key developments: 1) a growing understanding of the problem and its societal impacts, 2) access to viable portability solutions and 3) corporate acceptance of the responsibility to act for the benefit of society. Hawkins further notes that this view is now being echoed in retirement research & public policy circles.
Georgetown University's prestigious Center for Retirement Initiatives (CRI) makes clear their advocacy for solving the nation's cashout leakage problem through the application of auto portability. A team of research analysts (Andrew Green, Benjamin Roth) along with CRI executive director Angela Antonelli, details the negative societal impact of cashout leakage and makes a strong case for the adoption of auto portability, a solution that research indicates will deliver significant benefits to minorities. The team cites the growing support for auto portability, including bipartisan political support, and concludes that "plan sponsors should take action to further facilitate the adoption of auto-portability, and in doing so, improve the retirement security of millions of Americans."
In her latest column for Forbes, Angela Antonelli, executive director of Georgetown University's Center for Retirement Initiatives (CRI), makes clear her advocacy for solving the nation's cashout leakage problem through the application of auto portability. Antonelli, a noted retirement researcher and public policy expert, details the negative societal impact of cashout leakage, before making a strong case for the adoption of auto portability, a solution that she believes will deliver particular benefits to minorities. Antonelli concludes with a clear call to action, stating that "we have a solution and it is time to get it done."
According to Forbes retirement contributor Elena Botella, Americans not only save too little for retirement, they don't keep enough of what they save. Botella examines the phenomenon known as "leakage" and reveals that it's a big problem -- where 20 cents of every dollar saved for retirement is withdrawn too early. Botella cites Retirement Clearinghouse's DOL-approved auto portability program as a viable solution to leakage, delivered through a network of retirement plan recordkeepers.
Writing in 401kSpecialist, RCH's Tom Hawkins identifies clear, across-the-board indications that America's defined contribution (DC) system is entering a "new age" of plan-to-plan portability. Portability, Hawkins contends, is the "missing ingredient" that, when added to 401(k) plans, will resolve the damaging disconnect between America's highly-mobile workforce and their immobile retirement savings.
Writing in Lexology.com, the law firm Eversheds Sutherland LLP addresses notable 2019 ERISA guidance promulgated by the Department of Labor, including Advisory Opinions, Field Assistance Bulletins and Prohibited Transaction Exemptions (PTEs). For the 7 PTEs finalized in 2019, they single out RCH and auto portability, stating: "One exemption broke new ground. PTE 2019-02 granted relief for RCH’s auto-portability program, with respect to certain fees charged in connection with the transfer of accounts to the plan of a participant’s new employer."