Retirement Confidence Survey Highlights Overwhelming Participant Support for Auto Portability

CHARLOTTE, N.C., April 22, 2021 /PRNewswire/ -- The 31^st Annual Retirement Confidence Survey conducted by the Employee Benefit Research Institute (EBRI) and Greenwald Research has found that nearly nine out of 10 workers with access to an employer-sponsored defined contribution plan view auto portability—the new 401(k) plan default feature automatically transferring small-balance retirement savings when participants change jobs—as a valuable benefit. The survey results, released today, independently validate the findings from the study of mobile workforce behaviors conducted in April 2015 by Boston Research Technologies in collaboration with Retirement Clearinghouse, LLC, in which 93% of participants expressed their view of auto portability as an excellent or good service.

"The findings of this year's Retirement Confidence Survey clearly demonstrate that the vast majority of plan participants would welcome the opportunity to automatically move and consolidate their 401(k) savings when they change jobs. This very strong support for auto portability among participants has not budged over a span of six years," said Spencer Williams, Founder, President, and CEO of Retirement Clearinghouse. "By providing a voice to participants, the survey results have given plan sponsors and recordkeepers even greater motivation to adopt the technology and solutions for enabling auto portability—further fulfilling their responsibility as fiduciaries, and helping more hardworking Americans preserve and increase their retirement savings."

The Retirement Confidence Survey (RCS), carried out every year by EBRI and independent research firm Greenwald Research, gauges the views and attitudes of working-age and retired Americans related to various aspects of retirement, including preparations for life in retirement. This is the first year that Retirement Clearinghouse has partnered with EBRI on the Retirement Confidence Survey. For more information about the 2021 survey findings, please visit https://www.ebri.org/retirement/retirement-confidence-survey.

The RCS is the longest-running survey of its kind, and was expanded by EBRI in 2021 to focus on the retirement security of Black and Latinx workers and retirees. In addition, EBRI broadened the RCS to include additional questions addressing workplace retirement savings programs, including auto portability. To learn more about the survey's auto portability findings, please visit https://www.ebri.org/docs/default-source/rcs/2021-rcs/rcs_21-fs-6_wsp.pdf?sfvrsn=7ad83a2f_2

When asked how valuable it would be if their retirement plan savings in a previous employer's plan were automatically transferred to their current employer's plan if/when they changed jobs, 85.3% of RCS respondents, or nearly nine out of 10, indicated that they would value such an automatic transfer. Furthermore, those participants who stand to benefit the most from auto portability—including minorities, younger participants, and lower-income workers—want it more. Among the various groups of workers who are offered a workplace plan, the vast majorities stated they would consider auto portability to be a valuable benefit:

• 89.6% of Blacks
• 90.9% of Latinx
• 91.1% of workers with less than $25,000 in annual household income
• 94.6% of workers between ages 25 and 34

The RCS finding that indicates high demand for auto portability among younger workers is similar to the 2015 mobile workforce study's report (https://info.rch1.com/mobileworkforce) that 95.6% of Millennials would take advantage of auto portability.

Every year, based on EBRI data, $92 billion leaves the U.S. retirement system when job-changing participants prematurely cash out their 401(k) savings accounts, and pay related taxes and penalties. Black and Latinx workers are the most adversely affected by this phenomenon—63% of Black and 57% of Latinx workers cash out within a year of changing jobs. Low-income and younger workers also have high cash-out rates, as 50% of workers earning $20,000 to $30,000 and 44% of workers between ages 20 and 29 cash out up to a year after switching employers.

The major cause of cash-out leakage is the historic lack of simplified, technology based plan-to-plan portability in the U.S. retirement system. Retirement Clearinghouse developed auto portability—the routine, standardized, and automated movement of a worker's 401(k) savings account from their former employer's plan to an active account in their current employer's plan—as a private-sector solution to this crisis.

EBRI estimates that, if all U.S. retirement savers had access to auto portability, approximately $2 trillion in additional retirement savings would be preserved in the U.S. retirement system over a 40-year period. These savings would include about $191 billion for an estimated 21 million Black Americans, and $619 billion for all minority workers.

"EBRI research finds that auto portability can play a decisive role in shrinking our country's retirement savings shortfall—as well as reducing the wealth gap for various demographics," said Lori Lucas, CFA, President and CEO of the Employee Benefit Research Institute. "Our survey findings indicate that workers see the value that auto portability can bring when it comes to retirement savings."

On behalf of a large plan sponsor in the health services sector, Retirement Clearinghouse completed the first-ever fully automated, end-to-end transfer of retirement savings from a safe-harbor IRA into a worker's active account in July 2017. Since that time, more than 2,000 workers have consented to have their former-employer plan accounts transferred into their current employers' plans.

In July 2020, it was announced that Alight Solutions, a leading provider of next-level human capital and business solutions, would offer the auto portability solution to its client base of 185 defined contribution plan sponsors serving nearly 5 million employees by the end of last year. For more information about auto portability, please visit https://www.rch1.com/auto-portability.

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 metrics, and enable participants, regardless of account balance, to seamlessly transport their retirement savings through every phase of their careers.

Retirement Clearinghouse's portability solutions have been proven to cut cash-outs by over 50% and significantly increase average account balances. The firm's portability 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 (RCH) remains the only independent provider that defines its primary business as the consolidation of retirement savings into active 401(k) or IRA accounts and provides plans and their participants with services that streamline the seamless transfer of savings between retirement accounts.

Originally established as RolloverSystems in 2001, Charlotte, N.C.-based Retirement Clearinghouse works with more than 30,000 retirement plans and has helped guide over 1.6 million plan participants with more than $24 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.

SOURCE Retirement Clearinghouse

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