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Robert L. Johnson Gives Keynote Address at 2024 EBRI Spring Policy Forum
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, including 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.
Harness the Power of Retirement Savings Consolidation
Consolidation is a powerful force in our world, and when it comes to retirement savings, 401(k) account consolidation is inherently efficient and exerts a protective effect on retirement savings as participants change jobs. Writing in RCH’s Consolidation Corner blog, Tom Hawkins offers readers six key facts about retirement savings consolidation, providing ample evidence on the efficacy of consolidation in improving participants’ retirement outcomes.
Four Key Findings from the New Auto Portability Simulation
Writing in the RCH Consolidation Corner blog, RCH's Tom Hawkins summarizes the four key findings from the firm's Auto Portability Simulation, a discrete event simulation that models the impacts of auto portability over a 40-year period, and are detailed in a new white paper, Revisiting the Auto Portability Simulation: The Impact of the Portability Services Network, SECURE 2.0 and Expanded Access. Hawkins contends that the new APS analysis has improved the model’s predictive accuracy by incorporating new parameters that reflect “changing realities” driven by three major developments: 1) the advent of the Portability Services Network, 2) the passage of the SECURE 2.0 Act and 3) ongoing progress in expanding access to workplace retirement savings plans. The paper's four key findings highlight the growth of the participant population that will be subject to mandatory distributions, as well as auto portability’s effects on reducing cashout leakage, generating incremental retirement wealth, and delivering benefits to minorities and lower-income workers.
Auto Portability: It’s About the Participants
Writing in RCH's Consolidation Corner blog, Tom Hawkins reminds readers what auto portability is all about -- improving the retirement security of marginalized defined contribution participants. These participants -- comprised largely of minorities, women, younger and lower-income participants -- not only need auto portability the most, but there's solid evidence that they want it as well. To support his claim, Hawkins cites three highly-regarded surveys that have found a strong participant preference for auto portability and for consolidating small balances within the defined contribution system, and believes that recent developments will "augur well for Americans’ retirement security."
Focus Shifts to Plan Sponsors as Portability Network Set to Go Live
Writing in the Consolidation Corner blog, RCH's Tom Hawkins describes the coming "shift" that will occur when the Portability Services Network (PSN) goes live at the beginning of the fourth quarter of 2023. Describing PSN's network-building achievements to date as "nothing short of phenomenal", Hawkins adds that "integration had proceeded apace" and that "plan sponsors will take center stage as they begin to adopt auto portability and witness its tangible results." Plan sponsor adoption will accelerate as auto portability demonstrates its obvious benefits to plans, to participants and to society at large, where adoption will eventually serve as a "positive indicator of a socially responsible enterprise."
The Future is Brighter for Small-Balance Retirement Accounts
RCH's Tom Hawkins, writing in the Consolidation Corner blog, describes the "brighter future" emerging for small-balance retirement savings accounts. Hawkins maintains that these accounts, which he associates with an increased incidence of sub-optimal participant outcomes, will fare much better in the future due to "large-scale, industry-led action on auto portability, and more recently, proactive steps being taken by leading providers to consolidate legacy small-balance IRAs."
The 401(k) “House-Cleaning” to Come
The increase in the automatic rollover threshold from $5,000 to $7,000, as provided for in section 304 of the SECURE 2.0 legislation, will become effective for mandatory distributions made after December 31, 2023. What will be the impact of these provisions, if fully embraced by plan sponsors? One thing is certain – on both a one-time and ongoing basis, far more terminated participants will be subject to the automatic rollover provisions of their former-employers’ plans. Writing in the RCH Consolidation Corner blog, Tom Hawkins explores the impact of an increased threshold that, when paired with the advent of auto portability and the operational status of the Portability Services Network (PSN), could mean that small balance terminated participants will finally come out on top.
As Time Passes, The Gains Become Harder
RCH's Tom Hawkins, writing in the Consolidation Corner blog, observes that our nearly 45 year-old defined contribution system may face diminishing returns as it tries to generate future growth, and should focus on quality and efficiency as it simultaneously expands access. Using fitness as an analogy, Hawkins offers a "workout plan" for the DC system, including plugging leakage through increased portability and emergency savings, while fostering increased retirement savings consolidation to avoid an explosion in small accounts. When combined with expanded access initiatives, these measures can dramatically increase Americans' retirement security, over and above expanding access alone.
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