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Auto Portability - Recent Developments
Find the most-recent auto portability media coverage and developments.
The Penny Hoarder's senior writer Mike Brassfield reports on the 10/5/2022 announcement of an industry-led consortium to accelerate the adoption of auto portability. Brassfield acknowledges the setbacks that ultimately face participants who fail to preserve their small-balance retirement savings, and likens the new auto portability network to a "lost and found" -- providing a means for millions of participants to avoid the deleterious effects of cashing out.
Writing for Clark.com, Christopher Smith first takes the perspective of the participant, noting the difficult challenges they face in consolidating small-balance retirement savings and moving them forward as they frequently jobs. According to Smith, that dynamic produces high levels of cashout leakage, citing the $92.4 billion figure provided by EBRI. That perspective forms the basis for Smith's take that the new industry-led consortium announced 10/5/22 to accelerate the adoption of auto portability, will be a positive development. Smith observes that "instead of having your investments automatically cashed out — or put into cash in an IRA without you realizing it — your investments will follow you."
Ropes & Gray Represents Fidelity Investments In Creation of Portability Services Network, LLC, A Consortium Of Workplace Retirement Plan Recordkeepers
Ropes & Gray, a preeminent global law firm, with offices in America, Europe and Asia, announced the pivotal role that their firm played in representing Fidelity Investments "in its collaboration with Vanguard, Alight Solutions and Retirement Clearinghouse, LLC (RCH) to create a consortium of workplace retirement plan recordkeepers, Portability Services Network, LLC (PSN), which aims to accelerate the nationwide adoption of auto portability." Jeff Katz, co-head of Ropes & Gray’s global capital solutions and private credit practice, stated: “[t]he consortium will help mitigate cash-out leakage and preserve trillions of dollars in savings in the U.S. retirement system. Most importantly, it will protect workers’ retirement savings, particularly benefiting diverse communities, women, and low-income workers.”
Writing for Wealth Management, The Retirement Adviser University (TRAU) Founder & CEO Fred Barstein characterizes the recent announcement of an industry-led consortium to promote auto portability as "a major milestone for the defined contribution industry." In his piece, Barstein quotes RCH president & CEO Spencer Williams, who suggests that the new Network is "in discussion with three other top 10 DC providers" and is interested in examining other, long-term strategic opportunities for facilitating consolidation within the retirement industry.
Vanguard, Fidelity Will Join a 401(k) Auto-Portability Network to Rescue $1.5 Trillion in Retirement Savings
Arturo Conde, an editor at SmartAsset, writes about the new, retirement industry-led consortium formed by Fidelity, Alight and Vanguard, in tandem with Retirement Clearinghouse (RCH). Conde's piece breaks down what the new collaboration will mean, including its impact on reducing cashout leakage by automating the movement of small-balance defined contribution balances following job changes. Conde also references related research, proposed US Senate legislation on auto portability, and links to an auto portability infographic.
EurWeb.com's Ny MaGee provides his readership with an update on the news that BET founder Bob Johnson "has teamed with three of the largest 401(k) record keepers to help improve retirement outcomes for Black American workers over a generation by eliminating early cash-outs of 401(k) funds." Johnson, also the founder & chairman of the RLJ Companies, and the chair and majority owner of Retirement Clearinghouse (RCH), is quoted as stating that the new venture is "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."
Fresh from announcing the formation of a new retirement industry-led consortium, Bob Johnson, BET founder and founder and chairman of The RLJ Companies, discloses that he will be one of many prominent speakers at Black Enterprise's 2022 Black Men Xcel Summit, taking place Oct. 12-14 in National Harbor, MD. The article, which promotes the event, also provides numerous details on the Portability Services Network (PSN), which reporter Jeffrey McKinney notes is "expected to launch in the first quarter of 2023, [and] will be improving financial security for individuals and helping them avoid cashing out of their 401(k) accounts early."
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.