#United States #Charlotte, N.C. #Portability Services Network #Fidelity Investments #Retirement Clearinghouse

Portability Services Network: Revolutionizing Auto Portability

The Portability Services Network (PSN) has made remarkable strides in promoting auto portability within the retirement savings landscape. In just one year since its inception, the PSN has successfully enrolled over 15,000 defined contribution plans, representing around 5 million participants. This initiative is crucial for enhancing the retirement outcomes of countless under-represented employees who have historically faced obstacles in maintaining their savings.

A Mission to Serve Underserved Workers

Robert L. Johnson, the chairman of both PSN and the Retirement Clearinghouse, commended the efforts of six key recordkeepers: Alight, Vanguard, Fidelity Investments, Empower, TIAA, and Principal®. These organizations have been at the forefront, demonstrating their commitment to serving America’s under-saved and underserved workers through the auto portability initiative. Johnson emphasized, “Auto portability was designed with the goal of benefiting minority and women savers, and it’s truly rewarding to see it take shape firsthand.”

Addressing Systemic Challenges

Historically, the U.S. retirement system has encountered significant frictions that hindered the preservation and consolidation of 401(k) savings, especially during job transitions. These frictions disproportionately affect minority populations, making it easier for them to cash out their savings prematurely rather than keeping those investments intact for retirement.

Research conducted by the Retirement Clearinghouse forecasts that adopting auto portability nationwide could preserve an estimated $1.6 trillion in future savings across a 40-year span, benefiting approximately 98 million minority job-changers. Of this, 30 million Black Americans could potentially see an additional $216 billion added to their retirement wealth.

Encouraging Further Participation

PSN encourages recordkeepers interested in joining the initiative to connect via email or visit their website for additional information. They aim to continually expand their network to aid more hardworking Americans in achieving financial security in retirement. Spencer Williams, CEO of PSN and the Retirement Clearinghouse, expressed optimism regarding the future of auto portability, stating, “Our progress in plan enrollments has been unprecedented, indicating a robust response from the retirement services industry.”

A recent industry overview published by the Plan Sponsor Council of America (PCSA) highlighted a positive trend: 6% of all plans have started implementing auto portability, with many more considering its adoption. This includes an eye-catching 12.5% of plans with fewer than 1,000 participants.

A Growing Network of Support

As of December 1, 2024, PSN reports the completion of 549 auto portability transactions, with an additional 7,841 transactions currently in progress. This involves matching accountholders with their unresolved retirement funds from former employers, reducing the likelihood of account erosion due to cashing out.

The PSN acts as a facilitator, utilizing the advanced technology from Retirement Clearinghouse to streamline the process of locating and transferring retirement savings efficiently. This ensures participants can move their smaller accounts (defined as under $7,000) from previous jobs into their current employer's plan seamlessly.

Conclusion

Ultimately, as more recordkeepers join forces with PSN to promote auto portability, the impact on the broader retirement landscape will be profound. By minimizing cash-out leakage and improving overall retirement outcomes, the initiative stands to help a significant number of the country’s less financially secure workers.

For recordkeepers and plan sponsors wishing to engage with PSN and contribute to this pivotal change in retirement saving practices, comprehensive information is readily accessible through their website. The collaboration between commercial entities and nonprofit aims to uplift America's workforce as they prepare for a more secure financial future.

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For those interested in further details on this initiative, visit PSN or reach out directly to their communications team.