The next big 401(k) issue to hit Washington lawmakers could be auto-portability. On June 8, 2016 Retirement Clearinghouse (RCH) teamed with the Employee Benefit Research Institute (EBRI) to present testimony to the ERISA Advisory Council on Auto-Portability, or the automation of plan-to-plan transfers for small accounts, when participants change jobs.
The testimony was presented jointly by Tom Johnson, RCH’s EVP and head of policy development, and Craig Copeland, EBRI’s senior research associate. Johnson and Copeland not only addressed the basics of AutoPortability—what it is, why it’s needed and how it works–but also covered the latest key research findings and EBRI data.
In his portion of the testimony, Johnson addressed the Auto-Portability model and covered the key research initiatives that have steadily advanced the case for Auto-Portability, including:
- 2013 Boston Research Group Case Study
- Analysis of “Do-it-Yourself” Plan-to-Plan Transfers
- Operational Experience: “Report from the Front Lines”
- Boston Research Technologies-RCH Mobile Workforce Study
- Auto-Portability Simulation (APS) Model
Diving deeply into the EBRI database, Copeland went on to provide the Council with empirical support for Auto-Portability, including:
- The size and projected growth of defined contribution participants, through 2045
- The breakdown of participants, by account balance, and the associated employer turnover within each balance segment
- The overall annual size of the mobile workforce, including those under $5,000 who would be affected by Auto-Portability
- Components of cashout leakage, including “fast” leakage (at job change) and “slow” leakage (in years subsequent to job change)
Overall, the joint RCH-EBRI testimony before the ERISA Advisory Council represents the most credible, comprehensive and complete case to date for Auto-Portability—and is sure to be referenced by public policy makers in the weeks and months ahead.
See Also:
- Top 5 Misconceptions About 401k Auto-Portability
- Auto-Portability Receives Bipartisan Backing with House Bill
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
