Auto portability adoption is on the upswing, according to new data released today by the fledgling Portability Services Network. In its first year of operation, more than 15,000 defined contribution plans representing approximately 5 million participants have signed up for auto portability through the network.
“The response from plan sponsors has been more overwhelmingly positive than anything we’ve seen in the past regarding a new initiative from the retirement services industry.”
Spencer Williams, Portability Services Network
“I heartily applaud the six recordkeepers that launched Portability Services Network for their unwavering commitment to improving the retirement welfare of America’s under-saved and under-served workers,” said Robert L. Johnson, Chairman of the Portability Services Network and Retirement Clearinghouse. “Auto portability was conceived as an innovation to benefit minority and women savers, and it is immensely gratifying to witness its coming to fruition through the hard work of Alight, Vanguard, Fidelity Investments, Empower, TIAA, and Principal to make auto portability a reality. We encourage more plan sponsors and recordkeepers to join and do their part to assist low-income workers in achieving a financially secure retirement.”
Systemic frictions in the U.S. retirement system have historically impeded efforts to preserve, consolidate, and incubate 401(k) savings at the point of job-change. These frictions have disproportionately affected minority Americans, who have found it much easier to prematurely cash out their savings than keep those precious dollars invested in the retirement system.
Research from Charlotte, N.C-based Retirement Clearinghouse estimates that $1.6 trillion in additional savings would be preserved in the U.S. retirement system over a 40-year period if auto portability were to be adopted by plan sponsors and recordkeepers across the nation. That sum would include $744 billion in extra retirement income for 98 million minority job-changers, with 30 million Black Americans expected to preserve $216 billion in incremental retirement wealth.
“The number of defined contribution plans that have enrolled in auto portability in just one year represents an incredible response,” said Spencer Williams, CEO of Portability Services Network and Retirement Clearinghouse. “In fact, recent survey results indicate that the response from plan sponsors has been more overwhelmingly positive than anything we’ve seen in the past regarding a new initiative from the retirement services industry. We look forward to working with more plans and recordkeepers to help hardworking Americans improve their retirement-saving outcomes.”
In October 2024, the Plan Sponsor Council of America (PCSA) published its industry snapshot of “Plan Sponsor Policies on Cashouts, Missing Participants, and Uncashed Checks.” Based on the PCSA’s survey of plans, conducted in September 2024:
- 6% of all plans have implemented auto portability or will do so soon, including 12.5% of plans with between 200 and 999 participants and 8.7% of plans with 1,000 to 4,999 participants.
- However, 25.6% of plans are considering the implementation of auto portability, including 30.4% of plans with 1,000 to 4,999 participants and 47.5% of plans with over 5,000 participants.
The Portability Services Network also reports that:
- 549 auto portability transactions have been completed as of December 1, 2024.
- 7,841 auto portability transactions are in motion as of December 1, 2024. These involve Retirement Clearinghouse having confirmed a match for an accountholder of a small account stranded in a retirement plan or moved into a safe-harbor IRA (with the opt-out/consent notification process having been initiated). As of Dec. 1, approximately 40% of the 15,000+ plans are live, with the bulk of the remaining plans scheduled to go live with PSN Auto Portability in January 2025.
Portability Services Network, LLC (PSN) is an independent, recordkeeper-led utility which utilizes the Retirement Clearinghouse (RCH) technology to build a nationwide, digital hub connecting workplace retirement plan recordkeepers and the plan sponsors they serve that elect the auto portability service.
Any recordkeeper that wishes to join the network can email sales@rch1.com or visit https://psn1.com/learning-center/about-psn/a-retir… for more information. Plan sponsors interested in participating should reach out to their recordkeepers.
SEE ALSO:
• 4 Compelling Reasons for Plan Sponsors to Adopt Auto Portability
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
