ROBERT L. JOHNSON, FOUNDER OF THE RLJ COMPANIES AND CHAIRMAN OF PORTABILITY SERVICES NETWORK LAUDS CONGRESS FOR INCLUDING AUTO PORTABILITY IN THE SECURE 2.O ACT OF 2022 - AS PART OF THE OMNIBUS SPENDING BILL
Development and Adoption of the Auto Portability Solution Has Taken Over a Decade; Auto Portability is now Poised to Deliver Greatly Improved Retirement Savings Outcomes to Millions of America's Under-Served and Under-Saved Workers
BETHESDA, Md., Dec. 28, 2022 /PRNewswire/ -- The bi-partisan Congress today supported the longtime efforts of Robert L. Johnson, founder of The RLJ Companies and Chairman of Portability Services Network (PSN) and Retirement Clearinghouse (RCH), by passing legislation that codifies auto portability. Auto Portability is the routine, standardized, and automated movement of an employee's retirement saving account balance (under $5000) from the retirement plan of their former employer into an active account in their current employer's plan. Retirement Clearinghouse developed the technology and created the intellectual property to power auto portability, which makes it easy for American workers to move and consolidate their 401(k) account at the point they change jobs.
"I am pleased that this Congress codified auto portability and thereby recognized the value and importance this plan feature delivers to address the retirement security needs of so many underserved Americans," said Johnson. "I am particularly grateful to Senators Tim Scott (R-SC) and Sherrod Brown (D-OH) for their support in advancing auto portability through this Congress. I also want to thank Marc Morial, President & CEO of the National Urban League and Derrick Johnson, President & CEO of the NAACP for their leadership and being early, vocal supporters of auto portability. As the leading National organizations respectively focused on equality and economic empowerment, they noted that auto portability addresses the retirement savings crisis confronting Black Americans and low-wage workers, ensures a financial infrastructure necessary to maintain economic stability for retirement savings, and addresses the racial wealth gap," Johnson concluded.
Cashing out has typically been an easier option than moving balances from one Plan to another, leading 31% of job changers to cash out of their savings within one year of their job change. Approximately $92 billion in savings leaves the U.S. retirement system every year because Americans who change jobs prematurely cash out their workplace retirement accounts and pay taxes and penalties on those cash-outs.
The Employee Benefit Research Institute (EBRI) estimates that if auto Portability was broadly adopted, over the course of a 40-year period, an additional $1.5 trillion in savings would be preserved in the U.S. retirement system, including $619 billion for 67 million Black and minority workers, and $365 billion for 42 million women participants of all ethnicities.
In October 2022, Johnson announced that Retirement Clearinghouse joined forces with three of the Nation's largest 401(k) recordkeepers, Alight, Fidelity®, and Vanguard, to form Portability Services Network (PSN). Portability Services Network's auto portability solution will be to connect workplace retirement plan recordkeepers and the plan sponsors they serve to deliver auto portability. PSN will act as a clearinghouse for automatically locating a participant's active workplace retirement account from their prior employer's plan and moving their balance into their active account.
The consortium currently represents approximately 43.8 million workers across more than 48,000 employer-sponsored retirement plans, based on data published by Pensions & Investments. Portability Services Network will utilize Retirement Clearinghouse's auto portability solution.
The RLJ Companies, LLC, founded by Robert L. Johnson, is an innovative business network that provides strategic investments in a diverse portfolio of companies. Within The RLJ Companies portfolio, Johnson owns or holds interests in businesses operating in a publicly traded hotel real estate investment trust (REIT); private equity; 401k fintech services; automobile dealerships; content streaming; and gaming and sports betting. The RLJ Companies is headquartered in Bethesda, MD. Prior to founding The RLJ Companies, Johnson founded Black Entertainment Television (BET). For more information, please visit www.rljcompanies.com.
The Portability Services Network (PSN) is a retirement industry-led utility dedicated to accelerating the nationwide adoption of auto portability to help America's under-served and under-saved workers improve their retirement outcomes. Founded in October 2022, PSN is jointly owned and governed by its member owners, including defined contribution plan recordkeepers representing approximately 43.8 million workers across more than 48,000 employer-sponsored retirement plans, and Retirement Clearinghouse (RCH). As an industry utility, PSN's goal is to deliver auto portability at the lowest cost to participants, with no remuneration to recordkeepers. PSN is expected to be fully operational in the first quarter of 2023, and encourages all recordkeepers to join. To learn more about PSN, email [email protected].
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 34,000 retirement plans and has helped guide over 1.8 million plan participants with more than $28 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 The RLJ Companies
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