When it comes to the 401(k) plan feature known as automatic enrollment, most industry observers seem to agree that it’s a good thing. In a world of scarce resources, you can never have too much of a good thing, right?
Consolidation Corner Blog
Consolidation Corner is the Retirement Clearinghouse (RCH) blog, and features the latest articles and bylines from our executives, addressing important retirement savings portability topics.
Hey, plan sponsors: Imagine for a moment that your active participants are Tom Cruise from Mission: Impossible (or Barbara Bain, Peter Graves and Martin Landau, for those of us who remember the classic TV series).
Have you ever received a letter with the notice “Time Sensitive Material! Open Immediately!” boldly splashed across the outside of the envelope, only to sigh with disappointment with what’s on the inside? While the disappointment of false advertising so often seems to be the case with “junk mail,” the warning turns out to be true when we examine the behaviors of retirement plan participants who have recently changed jobs.
With the advent of the Department of Labor's Fiduciary Rule, more employers are looking to promote lifetime plan participation and encourage participants to consolidate retirement assets in their current, active 401(k) plan. The plan feature to enable consolidation in the active 401(k) plan is the roll-in contribution. Retirement Clearinghouse is the recognized thought leader in roll-in facilitation. We have prepared this video - The ABCs of Roll-Ins -- as a resource for plan sponsors who are considering a formal roll-in program, as well as offering a roll-in facilitation service for their plan participants.
According to the recently released 2016 Willis Towers Watson U.S. Retirement Governance Survey, a major trend in retirement plan governance is the growing concern employers have for employees’ retirement benefit adequacy and financial well-being. To address this concern, sponsors indicated plans to increase monitoring of participant behaviors, using metrics such as plan participation and contribution rates, as well as carefully tracking the performance of their plans’ investment managers.
In his most recent article in MarketWatch, RCH’s Spencer Williams cites the recent market trauma experienced in the wake of the United Kingdom’s decision to exit the European Union (“Brexit”) as a good reason for retirement-savers to consolidate their accounts.
In the first half of 2016, not only has the retirement industry awakened to the problem of cashout leakage, but it’s begun to acknowledge its root cause: a lack of retirement savings portability. At the same time, Auto Portability has emerged as the only viable solution to cashout leakage, delivering portability for the small-balance (less than $5,000) job-changer, automatically moving their balances forward when they change jobs and enroll in a new plan.