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Retirement Clearinghouse (RCH) is an innovator in the retirement services industry, developing and introducing industry best practices that are moving retirement forward by delivering retirement portability for millions of job-changing Americans. RCH is proud to showcase our thought leadership, as well as other public policy makers and industry leaders whose positions are consistent with our own views and practices.
Expanding on research comparing DB plans vs. 401(k) plans with auto enrollment, on 2/14/19 EBRI released an infographic revealing the beneficial effect of auto portability on Milliennials. When auto portability is added to 401(k) plans, Millennials -- both male and female, for all years of eligibility, and for all income quartiles -- experience significant improvements in their 401(k) plan performance, as measured by equivalent break-even DB plan accrual rates. The latest EBRI analysis adds to a considerable body of evidence that auto portability is a leading retirement savings public policy initiative.
Examining the 2/7/19 EBRI Research Brief comparing DB vs. DC plans, PlanAdviser's John Manganaro cites the study as finding that DB break-even accrual rates required for equivalency to their 401(k) counterparts are "rarely less than 1.5% of final pay." Under a scenario where auto portability is combined with the 401(k) plans, the DB break-even accrual rates increase further to deliver equivalency, with auto portability's impact "greatest among the lowest income quartile."
In the January 2019 edition of PLANSPONSOR magazine, Groom Law Group's Stephen Saxon welcomes the U.S. Department of Labor's (DOL) November 2018 guidance on the RCH auto portability program. The DOL, says Saxon, "clarifies important questions about the fiduciary implications for plan sponsors" and provides "much welcome comfort" to plan fiduciaries considering the program. Saxon concludes his analysis by stating that "auto-portability will have a positive, long-term impact on the U.S. retirement system by reducing leakage and enabling American workers to consolidate their small retirement balances on an efficient basis."
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In his ongoing "Barry's Pickings" column for PLANSPONSOR, Michael Barry, president of O3 Plan Advisory Services LLC, gives the U.S. Department of Labor an 'A' for its November 2018 issuance of a proposed Prohibited Transaction Exemption (PTE) and an Advisory Opinion on Auto Portability. Barry adds: "as a long-time advocate of the establishment of a clearinghouse, I view this as very good news."
Arris Reddick Murphy, Contributing Editor to HR Daily Advisor, and senior counsel with FedEx Corp.’s Tax & Employee Benefits Law group, examines the potential impact of the Department of Labor's recent actions towards RCH's auto portability program. Murphy outlines the strategic benefits for plan sponsors who participate in the auto portability program, including a reduction in small accounts, missing participants and uncashed checks. Murphy also points out the importance of participation of both plan sponsors and service providers, stepping through various aspects of the program, while offering planning tips for participating plan sponsors.
In his 11/19/18 opinion piece in The Hill, former U.S Treasury official and senior fellow in economic studies at The Brookings Institution Mark Iwry writes about his personal, 22-years long advocacy for 401(k) portability, dating back to the Clinton administration. Not much had changed in that time, says Iwry, until last week's guidance by the Department of Labor (DOL) on auto portability, led by the efforts of RCH executives Spencer Williams and Tom Johnson. With the way cleared by the DOL, Iwry notes that auto portability's success will now depend on the "willingness of recordkeepers...to cooperate so participants can enjoy expanded portability."
In this article, RCH's Spencer Williams and Tom Hawkins address an important retirement public policy question: How would a pairing of auto portability with open multiple employer plans (or “open MEPs”) impact the retirement savings of America’s minorities, and particularly, African-Americans?
RCH's Tom Hawkins reveals new research that predicts 401(k) participant outcomes following separation for two balance segments – those above & below $15,000. Using logic developed in the Auto Portability Simulation to track & tally participant outcomes 8 years following separation, the results reveal a startling contrast between the two segments – with participants in the over-$15,000 segment experiencing far-superior outcomes to those in the under-$15,000 segment. To address the disparities, Hawkins advocates for a new “automatic” in the form of auto portability.