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Consolidation Corner Blog
Consolidation Corner is the Retirement Clearinghouse (RCH) blog, and features the latest articles and bylines from our executives, addressing important retirement savings portability topics.
Here’s to the Future “Graduates” of Auto Portability
While auto portability’s immediate impact in reducing cashouts is well-documented, new insights reveal another powerful long-term effect: systematic balance consolidation that helps small-balance job-changing participants cross the vital $10,000 savings hurdle, where retirement security becomes self-reinforcing. Writing the RCH’s Consolidation Corner blog, Tom Hawkins characterizes this effect as “graduating” from auto portability and uses Auto Portability Simulation (APS) data to follow a hypothetical “class” of 100 small-balance job-changers through their first three jobs – where 36% compile a perfect record of savings preservation and balance consolidation.
The Saver's Match and Auto Portability: A Powerful Combination
Two groundbreaking retirement savings initiatives could be poised to converge, potentially revolutionizing the way Americans save for retirement. The Saver's Match program, set to debut with the 2027 tax year, and auto portability, powered by the Portability Services Network (PSN), present a unique opportunity to address long-standing challenges in the retirement system. By leveraging the strengths of both programs, we can create a more robust and efficient retirement savings ecosystem that benefits millions of American workers.
The Accelerating Adoption of Auto Portability: A Market Adoption Theory Perspective
RCH’s Tom Hawkins, writing in the Consolidation Corner blog, examines the accelerating adoption of auto portability from the perspective of the tried-and-true theory of market adoption. Hawkins takes the position that auto portability is “on the cusp of becoming a mainstream feature in retirement plans” as it transits the innovator/early adopter phase and moves into the early majority phase, as described in the theory’s framework.
The Compelling Case for Women and Auto Portability
Auto portability will deliver broad-based benefits to America’s workforce, but research has shown that the new feature disproportionately benefits under-saved and underserved demographic segments, including minorities, women, lower-income and younger workers. Within those demographic segments, a very compelling case can be made for the importance of auto portability to women, who face unique retirement savings challenges that auto portability can help address.
PSN Auto Portability Signs Up 15,000 Plans in Year One
Retirement Clearinghouse (RCH) and Portability Services Network (PSN) Executive Vice President Neal Ringquist recaps breaking news of the day, where a press release issued by PSN announces that, in its first year of operation, more than 15,000 plans representing approximately 5 million participants have signed up for PSN auto portability. Ringquist's provides readers with a link to the full press release, links to more information about PSN auto portability, as well as to RCH's other portability services.
Dressing Up Traditional Automatic Rollovers
Writing in the Consolidation Corner blog, RCH’s Tom Hawkins describes learning about the existence of so-called “world-class” automatic rollover IRA services which lay claim to unspecified, premium features. In his article, Hawkins characterizes them as “old-school, traditional automatic rollover IRAs” which place participants in high-fee, safe harbor IRA “landfills” where their small balances languish. What’s needed, writes Hawkins, is “not faux fancy features – it’s a low-fee, transitional safe harbor IRA that preserves small-balance retirement savings for only as long as they can be consolidated into a current-employer’s plan or into another IRA.”
ERISA’s Golden Anniversary has Set the Stage for Helping Future Generations Improve Their Retirement Outcomes—in 2025 & Beyond
Writing in the Consolidation Corner blog Retirement Clearinghouse (RCH) and Portability Services Network (PSN) President & CEO Spencer Williams looks to the past and has his eye on the future, as ERISA celebrates its 50th anniversary. Williams chronicles key participant-centric technologies that have emerged, including daily valuation, automatic enrollment and target date funds. Looking ahead, Williams points to the most impactful developments, including the formation of the Portability Services Network, which has embraced auto portability, “making it easy for participants to bring their retirement savings with them from job to job until retirement” and “optimiz[ing] what auto enrollment and target-date funds can do for American workers saving for retirement.”
Leakage & Shrinkage: Two Brothers from the Same Mother
Writing in the RCH Consolidation Corner blog, Tom Hawkins compares and contrasts cashout leakage with “shrinkage” – a related phenomenon newly identified by Vanguard in their September 2024 study: Job transitions slow retirement savings. Although the Vanguard study does not specifically use the term “shrinkage” – their study refers to a decline in retirement savings rates that occurs when individuals transition between jobs, leading to sub-optimal retirement outcomes. Hawkins also finds it intriguing that the Vanguard study identifies auto portability as a potential solution for the shrinkage problem, promoting better retirement outcomes for workers.
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