In January 2016, this blog published a post on the November 2015 letter from Senator Patty Murray (D–WA) of the Senate HELP committee, signed by a bicameral group of Congressional members, urging then Department of Labor (DOL) Secretary Thomas Perez to encourage the DOL’s Employee Benefits Security Administration to issue guidance on auto portability.
To demonstrate the bipartisan resolve to plug cash out leakage in the retirement system through auto portability, Senator Tim Scott (R-SC) published a similar letter this week, sent to current Labor Secretary Alexander Acosta, and co-signed by 10 Republican Senators, urging similar guidance on auto portability.
For this letter, Senator Scott also received the backing of a number of retirement-focused trade organizations, including the American Benefits Council, Financial Services Roundtable, Investment Company Institute, Insured Retirement Institute, Securities Industry and Financial Markets Association, U.S. Chamber of Commerce, Defined Contribution Institutional Investor Association (DCIIA), and the Society of Professional Asset Managers & Recordkeepers (SPARK).
In addition to Senator Scott’s letter, auto portability received an important endorsement during a hearing on Capitol Hill this week. During her July 19th testimony at the House Ways & Means Subcommittee on Tax Policy hearing titled “How Tax Reform Will Simplify Our Broken Tax Code and Help Individuals and Families” Jania Stout, Practice Leader and Co-Founder of Fiduciary Plan Advisors at HighTower, and Vice President of the National Association of Plan Advisors (NAPA), expressed her support for auto portability as a solution to the cash out leakage problem.
Auto portability - the routine, automated movement of a participant’s retirement savings from a former employer’s plan to that employee’s current employer-sponsored plan as they change jobs – is emerging as a best practice to plug cash out leakage and address the growing small account problem among DC plans.
Let’s hope that the strong bipartisan support in Washington results in the requested guidance from the Department of Labor, and is a catalyst for broad retirement industry adoption of auto portability.