In July, an article noted that the adoption of auto portability was picking up steam with thousands of plan sponsors already signing up for the service, delivered by the Portability Service Network (PSN). As I write this around six weeks later, that figure continues to rise at a brisk pace.

As PSN operations have commenced, and as the automated plan-to-plan consolidation of small balances begins, a familiar industry adoption pattern is emerging – where innovators within the plan sponsor community lead the charge and are quickly followed by others.

For plan sponsors who are still considering adopting auto portability, here are four compelling reasons why you should move now to embrace the new plan feature.

New retirement innovations, however compelling they may be, face their biggest challenge in surmounting the glacial pace of change that prevails in the retirement industry, where nothing comes easy.

During the past several years, much progress has been made to simplify the process of enabling defined contribution plan participants to transfer their savings from one plan to another when they change jobs. These strides have been made thanks to an ongoing partnership between the private and public sectors, and between Democrats and Republicans in Congress.

In November 2023, we saw the launch of the Portability Services Network, with our nation’s leading retirement plan record-keepers—Alight Solutions, Empower, Fidelity Investments, Principal, TIAA, and Vanguard—on board as founding members. The Portability Services Network makes the digital auto portability solution a reality for helping Americans keep their retirement savings invested in the system and working for them.

On May 16th, Robert L. (Bob) Johnson, Chairman of The RLJ Companies, Retirement Clearinghouse (RCH) and the Portability Services Network (PSN), delivered the keynote address to the 2024 EBRI Spring Policy Forum, co-hosted by the American Benefits Council.  

In Johnson’s address, entitled “Helping to narrow the nation’s lingering racial wealth gap” – the legendary Black American entrepreneur gave Forum attendees insight into the businessman’s long, purpose-driven journey to create entrepreneurial solutions to social problems. Johnson’s achievements began taking shape in the early 1980’s with his creation of Black Entertainment Television (BET) and have culminated in his current efforts in the retirement sector, where he’s become laser-focused on leveraging public/private sector solutions that narrow the wealth gap for minorities and women.

On the heels of the 11/7/23 announcement by the Portability Services Network that the industry-led consortium has launched its digital auto portability solution powered by Retirement Clearinghouse (RCH), RCH has made available the results from a new version of their Auto Portability Simulation (APS), a discrete event simulation that models the adoption of auto portability within America’s defined contribution system, over a 40-year period.

It’s sometimes easy to forget a basic tenet about auto portability.

Auto portability is about the participants.

And not just any participants. Auto portability is about the participants who truly need it, and – according to multiple surveys – have expressed a strong preference for it.

In the summer, we are used to temperatures spiking. But in addition to record-breaking temperatures and erratic weather, this summer has also brought a sharp increase in 401(k) hardship withdrawals.

When the Portability Services Network (PSN) goes live at the beginning of the fourth quarter of 2023, the focus of attention for auto portability will shift from the industry-led network of service providers to the leading plan sponsors who will begin adopting the new plan feature.

As PSN operations commence, and the automated plan-to-plan consolidation of small balances begins, a familiar industry adoption pattern will emerge – where innovators within the plan sponsor community lead the charge and are quickly followed by others.

While small-balance retirement savings accounts have fared poorly in the past, their future has never looked brighter. Real progress is being made in reducing their numbers while simultaneously preserving and consolidating their savings, vs. previous “solutions” that encouraged them to cash out or exiled them to dead-end safe harbor IRAs.

Americans’ lack of retirement preparedness has long been an area of concern for our nation. But findings in a recent study underscore that, despite all of the media articles offering tips for how to save more for retirement, many Americans are still making a self-destructive decision that can leave them with less when they retire.