Today’s workforce is more mobile than ever – but their retirement savings shouldn’t be left behind.
Each time workers change jobs, they face an important decision: what to do with their retirement account. For many – especially those with smaller balances – this moment often leads to costly mistakes, including cashing out savings early, or winding up in a dead-end safe harbor IRA that charges excessive fees and is invested in low-yielding default investment funds.
Auto portability changes that.
It ensures small-balance retirement savings automatically move with participants – so they stay invested, stay on track, and stay prepared for retirement.
The Problem: Job Changes Can Derail Retirement Savings
When workers leave a job, small retirement balances are especially vulnerable.
- Cashing out is often the default or easiest option
- The rollover process can feel confusing, time-consuming, and complex
- Many workers are tempted by immediate cash – even at the expense of their future
The result? Billions of dollars leak out of the retirement system each year, reducing long-term financial security.
For individuals, that can mean:
- Taxes and penalties
- Lost investment growth
- Lower retirement readiness
The Solution: Auto Portability
Auto portability automatically transfers small-balance retirement savings from a participant’s old employer’s plan into a new employer’s plan when they change jobs. The system works on the participant’s behalf – making the right decision the easiest decision.
Why Auto Portability Matters for Participants
1. It Helps Participants Preserve Their Savings
Cashing out may seem easy – but it can seriously damage retirement security.
Auto portability reduces this risk by:
- Automatically moving small-balance savings forward
- Eliminating the need to take action during a busy job transition
- Making it easier to stay investedResearch shows that when participants receive support during job changes, cashout rates can drop by more than 50%.
2. It Simplifies Participants’ Financial Life
Managing multiple retirement accounts across different employers can be overwhelming.
Auto portability:
- Consolidates participants’ accounts into one place
- Reduces paperwork and administrative hassle
- Eliminates the need to track down old accountsThe result: less complexity, more clarity.
3. It Keeps Money Working for Participants
Participants’ retirement savings grow over time through compounding.
When they cash out, they:
- Lose future growth potential
- May pay significant taxes and penaltiesWhen they stay invested:
Even small balances can grow significantly over time
- Retirement readiness improves dramatically
- Auto portability helps ensure your money stays invested and continues to grow.
4. It Matches What Participants Want
Today’s workers expect simplicity and automation in financial services. Auto portability delivers a seamless digital experience, where minimal work is required from the participant.
Surveys consistently show strong demand for automated portability solutions – and auto portability meets that expectation.
5. It Benefits Those Who Need it the Most
With people changing jobs more frequently than ever, traditional retirement systems haven’t kept up. This is particularly true for participants who have been traditionally underserved and under saved. Auto portability delivers disproportionate benefits to traditionally underserved groups including minorities, women, younger workers, and those with lower incomes.
The Bottom Line for Participants
Auto portability helps participants avoid cashing out prematurely, keeps their savings invested, simplifies their financial life and builds a stronger retirement future.
When careers move forward, retirement savings should too.