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Auto Portability - Recent Developments
Find the most-recent auto portability media coverage and developments.
Alex Padalka, reporting for Financial Advisor IQ, writes about the new industry-led consortium, known as the Portability Services Network (PSN), where "rivals...have joined forces in what they say is an attempt to 'accelerate' U.S. adoption of automatic portability of 401(k) and other retirement savings plans." Padalka continues: "[t]he consortium will tap the auto-portability capabilities of Retirement Clearinghouse" while looking to expand its already sizeable footprint in the 401(k) recordkeeping space.
Jeffrey McKinney, Black Enterprise contributor, reports that "BET founder and business mogul Bob Johnson is taking his biggest plunge to help close or narrow the nation’s lingering racial wealth gap." McKinney interviews Johnson to get the details on news that Retirement Clearinghouse (RCH), an RLJ Company chaired by Johnson, has partnered with Fidelity, Alight Solutions and Vanguard to form the industry's first-ever consortium, the Portability Services Network (PSN), whose aim is "to accelerate the nationwide adoption of auto portability to help America’s underserved and under-saved workers enhance their finances in their golden years." Johnson hails the development as "truly a historic moment" across a number of dimensions, but most notably in its prospects for reducing the minority wealth gap in America.
BET Founder Bob Johnson Joins With the Three Largest 401(k) Recordkeepers to Save $619 Billion For Black Americans
Black PRWire covers the 10/5/2022 Announcement that Fidelity, Vanguard and Alight Solutions have teamed with Retirement Clearinghouse (RCH), an RLJ Company, to form the first-ever industry consortium to address the problem of 401(k) cashout leakage, a persistent problem that disproportionately affect women and minorities, but particularly Black Americans. The article includes quotes from Mr. Johnson, RCH's Chairman, BET founder and Chairman of the The RLJ Companies. Johnson hailed the agreement as representing "truly a historic moment for the industry, as well as our country and is the first step to reduce the wealth gap between Black and white households in this country. "
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MoneyTalkNews writer Chris Kissell reports on the announcement that Fidelity, Alight and Vanguard have joined with Retirement Clearinghouse (RCH) to form an industry-led consortium to facilitate the rapid adoption of auto portability. Kissell explains to readers that the "Portability Services Network will serve as a clearinghouse for finding a participant’s workplace retirement account at the workplace he or she is leaving and transferring the account into the active account with the new employer."
PLANSPONSOR's DJ Shaw reports on the partnership between Retirement Clearinghouse (RCH) and an industry-led consortium, initially comprised of Fidelity, Alight Solutions and Vanguard. The consortium, writes Shaw, "seeks to tackle the issue of cash-out leakage from small retirement accounts and accelerate the nationwide adoption of auto-portability." Shaw first turns to RCH Executive Vice President Neal Ringquist, who states: "there’ll be an enormous amount of pressure on the industry to adopt auto-portability and it’s a level playing field for everybody that participates." Pointing to the uniqueness of the arrangement, RCH president & CEO Spencer Williams adds: “[t]here is no precedent for [this type] of an effort with three record keepers locking arms and saying, we’re going to tackle this issue of cash out leakage for small accounts.” In closing, Ringquist points to the prospect of favorable federal legislation, potentially coming in the form of the Advancing Auto-Portability Act of 2022, which could be incorporated into a bicameral SECURE 2.0 bill.
‘Billions of dollars get left behind’: The 401(k) industry now has a ‘lost and found’ for your old retirement accounts
CNBC personal finance reporter Greg Iacurci examines this week's announcement that a retirement industry-led consortium, collectively accounting for 40% of 401(k) savers, has been formed to accelerate the adoption of auto portability. Iacurci turns to Fidelity's Dave Gray for color on the consortium, and Gray underscores the importance of preserving small balances within the retirement system, growing the consortium's footprint and operating the new entity at a break-even price.
ERISA expert Christine Roberts, writing in the 'E is for ERISA' blog, develops a Q&A "geared for plan sponsors who are curious about the auto-portability process and how it might prove beneficial to their plan participants." Roberts writes: "[a]uto-portability can prove especially useful in industries with lower wages and high employee turnover, which may include retail, transportation, hospitality, and restaurants, because this can often lead to numerous account balances of $5,000 or less being involuntarily rolled to default IRAs" while also noting that "SECURE 2.0 proposals could increase the involuntary cash-out threshold to $7,000, which could expand the potential market for auto-portability solutions."
In an opinion piece for The Hill, U.S. Senators Tim Scott (R-SC), and Sherrod Brown (D-OH) team up to make a convincing bipartisan case for auto portability, which the legislators are seeking to further with the Advancing Auto Portability Act of 2022, provisions of which were subsequently incorporated into a broader Senate bill. Scott and Brown view auto portability as an urgent and necessary remedy to the problem of cashout leakage, writing that auto portability "would solve this [leakage] problem by allowing workers to automatically roll over savings from their previous employer to a new employer." They close with an appeal to fellow legislators, writing: "[w]e encourage our colleagues to support this bipartisan, commonsense legislation that will create a more secure financial future for American workers, and save people precious time and money."