Retirement Clearinghouse, LLC (RCH), an RLJ Company, Fidelity Investments, Vanguard,  and Alight Solutions announced that they have collaborated to create a consortium of workplace  retirement plan recordkeepers, Portability Services Network, LLC, to accelerate the nationwide  adoption of auto portability to help America’s under-served and under-saved workers improve their  retirement outcomes. 

Bob Johnson, who founded BET and the RLJ Companies, helped announce the consortium.

“For many years, I have been focused on finding business solutions to addressing the significant wealth gap facing  minorities, and I am delighted to see the leaders in the retirement services industry come together with my company, RCH, to accelerate the nationwide adoption of auto portability as part of our vision for  helping under-served and under-saved Americans achieve financial security,” Johnson said.

“This is truly a historic  moment for the industry, as well as our country and is the first step to reduce the wealth gap between  Black and White households in this country,” he added. “I urge Black organizations, Black elected officials, and the Black community to contact their workplace benefits office and 401(k) record keeper companies to  encourage them to fully adopt 401(k) auto portability.” 

The need for auto portability has been driven by the lack of seamless plan-to-plan savings portability  amid a highly mobile workforce. Cashing out has traditionally been seen as an easier option than the  current manual, often cumbersome and time-consuming process of transferring from plan-to-plan—and  cash-out rates for job-changing minorities, low-income workers, and women are also higher than  average. 

Retirement Clearinghouse developed its auto portability solution in conjunction with the private and  public sectors to reverse this trend. 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. Auto portability will help 67 million Black and minority workers save $619 billion and 42 million women workers of all ethnicities save $365 billion.

Approximately $92 billion in savings leaves the U.S. retirement system every year because Americans  who switch jobs prematurely cash out their 401(k) savings accounts and pay taxes and penalties on  those cash-outs, according to the EBRI. Workers with less than  $5,000—the focus of the auto portability service—cash out at the time of their job change at much  higher rates than all job-changing workers. 

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. Its members  have established an independent entity, Portability Services Network, LLC (PSN), which will  utilize Retirement Clearinghouse’s auto portability solution to build a nationwide digital hub connecting  workplace retirement plan recordkeepers and the plan sponsors they serve.

For more information, visit https://info.rch1.com/request-psn-info or email sales@RCH1.com. 

Our Weekly coverage of local news in Los Angeles County is supported by the Ethnic Media Sustainability Initiative, a program created by California Black Media and Ethnic Media Services to support minority-owned-and-operated community newspapers across California.

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