Auto Portability Simulation Model Unveiled at 78th EBRI Policy Forum

By Thomas Hawkins
Published on May 20, 2016

 EBRIOn May 12th, Retirement Clearinghouse President & CEOJ. Spencer Williams unveiled theAuto Portability Simulation(APS) at theEmployee Benefit Research Institute's 78th Policy Forum. The APS was developed by Retirement Clearinghouse in conjunction with Dr. Ricki Ingalls, Chair of Computer Information Systems at Texas State University, and Principal at Diamond Head Associates, Inc.

 
The APS is a discrete event simulation, the first-of-its-kind in the retirement industry.  It shows two scenarios -- the first scenario models current practices, while the second models auto portability -- demonstrating the improved outcomes that will occur when millions of job-changing Americans with defined contribution plan balances less than $5,000 experience true plan-to-plan portability. 

The results are compelling.  The key scenario—in which auto portability is widely adopted over a 10-year period and remains in force for a generation—shows that small account cash-outs could be reduced by two-thirds from the current annual rate of $7 billion to less than $2.5 billion per year. The APS also demonstrates that auto portability could generate more than $115 billion in new employer-plan savings for the current and next generation of retirement plan participants. In addition, the number of participants annually rolling their under-$5,000 account balance into their new-employer plans would increase from an estimated 200,000 today to more than 3 million per year -- affecting nearly 76 million participants over the simulation's timeframe.

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