(BPRW) Portability Services Network Jump-Starts Nationwide Adoption of Auto Portability
More Than 15,000 Defined Contribution Plans Have Signed Up During PSN’s First Year of Operation
(Black PR Wire) CHARLOTTE, NC — Portability Services Network (PSN) announces that, in its first year of operation, more than 15,000 plans representing approximately 5 million participants have signed up for auto portability.
Robert L. Johnson, Chairman of the Portability Services Network and Retirement Clearinghouse, said, “I heartily applaud the six recordkeepers that launched Portability Services Network for their unwavering commitment to improving the retirement welfare of America’s under-saved and under-served workers. Auto portability was conceived as an innovation to benefit minority and women savers, and it is immensely gratifying to witness its coming to fruition through the hard work of Alight, Vanguard, Fidelity Investments, Empower, TIAA, and Principal® to make auto portability a reality. We encourage more plan sponsors and recordkeepers to join and do their part to assist low-income workers in achieving a financially secure retirement.”
Systemic frictions in the U.S. retirement system have historically impeded efforts to preserve, consolidate, and incubate 401(k) savings at the point of job-change. These frictions have disproportionately affected minority Americans, who have found it much easier to prematurely cash out their savings than keep those precious dollars invested in the retirement system. Research from Retirement Clearinghouse estimates that $1.6 trillion in additional savings would be preserved in the U.S. retirement system over a 40-year period if auto portability were to be adopted by plan sponsors and recordkeepers across the nation. That sum would include $744 billion in extra retirement income for 98 million minority job-changers, with 30 million Black Americans expected to preserve $216 billion in incremental retirement wealth.
Any recordkeeper that wishes to join PSN can email sales@rch1.com or visit https://psn1.com/learning-center/about-psn/a-retirement-industry-led-utility for more information. Plan sponsors interested in participating should reach out to their recordkeepers.
“The number of defined contribution plans that have enrolled in auto portability in just one year represents an incredible response,” said Spencer Williams, CEO of Portability Services Network and Retirement Clearinghouse. “In fact, recent survey results indicate that the response from plan sponsors has been more overwhelmingly positive than anything we’ve seen in the past regarding a new initiative from the retirement services industry. We look forward to working with more plans and recordkeepers to help hardworking Americans improve their retirement-saving outcomes.”
In October 2024, the Plan Sponsor Council of America (PCSA) published its industry snapshot of “Plan Sponsor Policies on Cashouts, Missing Participants, and Uncashed Checks.” Based on the PCSA’s survey of plans, conducted in September 2024:
6% of all plans have implemented auto portability or will do so soon, including 12.5% of plans with between 200 and 999 participants and 8.7% of plans with 1,000 to 4,999 participants.
However, 25.6% of plans are considering the implementation of auto portability, including 30.4% of plans with 1,000 to 4,999 participants and 47.5% of plans with over 5,000 participants.
The Portability Services Network also reports that:
549 auto portability transactions have been completed as of December 1, 2024
7,841 auto portability transactions are in motion as of December 1, 2024. These involve Retirement Clearinghouse having confirmed a match for an accountholder of a small account stranded in a retirement plan or moved into a safe-harbor IRA (with the opt-out/consent notification process having been initiated). [1]
About Portability Services Network – Portability Services Network, LLC (PSN) is an independent, recordkeeper-led utility which utilizes the Retirement Clearinghouse (RCH) technology to build a nationwide, digital hub connecting workplace retirement plan recordkeepers and the plan sponsors they serve that elect the auto portability service. For PSN member recordkeepers and the plans that have elected the auto portability solution, PSN acts as a clearinghouse for automatically locating a participant’s active 401(k), 401(a), 403(b) or 457 account in their current employer’s plan and transferring the same participant’s account under $7,000 from their prior employer’s plan into their active account. PSN’s Board Members—Alight, Vanguard, Fidelity Investments, Empower, TIAA, and Principal® —encourage other recordkeepers to join the PSN, as growth of the network will only help to strengthen its ability to minimize cash-out leakage and improve retirement outcomes for America’s under-served and under-saved workers by creating even more opportunities to match participants with the workplace retirement accounts at their previous employers. Recordkeepers that own or participate in PSN will not receive any compensation for facilitating auto-potability transactions from participants. For more information, please visit https://psn1.com/.
About Retirement Clearinghouse – Retirement Clearinghouse, LLC is the leading provider of portability and consolidation services for defined contribution plans, acting as a trusted, unbiased intermediary between plan sponsors, participants, recordkeepers and other parties. Retirement Clearinghouse’s integrated financial technology, data and information solutions facilitate automated consolidation of small, redundant accounts for sponsors to improve plan performance, and enable participants, regardless of account balance, to seamlessly transport their retirement savings through every phase of their careers. These solutions include a domestic call center providing specialized assistance designed to enable end-to-end portability and account consolidation; uncashed check services; and the capability to search for lost and missing participants. Retirement Clearinghouse works with more than 39,000 retirement plans and has helped guide over 2.3 million plan participants with more than $33 billion in retirement savings. Retirement Clearinghouse is a portfolio company of The RLJ Companies, founded by Robert L. Johnson. For more information, please visit www.rch1.com.
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[1] As of 12/1, approximately 40% of the 15,000+ plans are live, with the bulk of the remaining plans scheduled to go live with PSN Auto Portability in January 2025.
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