Fidelity Investments, Vanguard and Alight Solutions announce that they have collaborated with Retirement Clearinghouse, LLC (RCH) to create a consortium of workplace pension plan archivists, Portability Services Network, LLC, to accelerate adoption nationwide automotive portability program to help underserved and underserved workers improve their outcomes in retirement. Thanks to this historic development, American workers who change employers can have their occupational retirement savings automatically transferred to their new retirement plan. Automating the process of transferring 401(k), 401(a), 403(b), and 457 account balances from one plan to another when workers change jobs will help mitigate cash outflows and to preserve trillions of dollars of retirement savings in the United States system, particularly benefiting minorities, women and low-income workers.
“I’m thrilled to see leaders in the retirement services industry come together to accelerate nationwide adoption of Retirement Clearinghouse’s automatic portability solution as part of our vision to help underserved and underserved Americans. -saved to achieve financial security,” said RRobert L. Johnson, Founder and Chairman of The RLJ Companies and Chairman of Retirement Clearinghouse. “This is truly a historic moment for the industry, as well as for our country.”
The need for automotive portability has been driven by the lack of seamless portability of savings from plan to plan within a highly mobile workforce. About $92 billion in savings leave the U.S. retirement system each year because Americans who change jobs prematurely cash out their 401(k) savings accounts and pay taxes and penalties on those withdrawals, according to the Benefits Research Institute (EBRI).[i] Workers with less than $5,000 — the goal of the car portability service — cash out when they change jobs at much higher rates than all workers who change jobs.
Cashing in has traditionally been seen as a simpler option than the current, often tedious and tedious, manual process of transferring between plans and cashing in rates for job changing minorities, workers low income and women. also above average. Retirement Clearinghouse has developed its automotive portability solution in collaboration with the private and public sectors to reverse this trend. EBRI estimates that if car portability were widely adopted, over a 40-year period, an additional $1.5 trillion in savings would be preserved in the US retirement system.[ii] Automatic portability will help:
67 million black and minority workers save $619 billion
42 million working women of all ethnicities save $365 billion
“As a leader in the workplace benefits industry, Fidelity is committed to improving the private retirement system for the benefit of all American workers,” said Kevin Barry, President of Workplace Investing at Fidelity Investments. “We are excited to have the opportunity to work with RCH and other leaders in our industry to focus on ‘connecting and protecting’ workers’ retirement savings, improving retirement outcomes, especially those of underserved and underserved workers. »
“We were honored to be the first 401(k) plan accountant to implement automatic porting for our clients,” said Alison Borland, Executive Vice President of Wealth Solutions at Alight. “Two years later, industry awareness and momentum behind this vital solution has grown significantly, and we look forward to working with our fellow industry leaders to reduce our nation’s retirement savings gap. .”
“As an industry, we have a responsibility to American workers to remove barriers to retirement readiness and increase their chances of investment success,” said John James, Managing Director and Head of Institutional Investors Group Vanguard. “The formation of this consortium directly complements Vanguard’s ongoing efforts to simplify investment and drive positive results for participants.”
The consortium currently represents about 43.8 million workers in more than 48,000 employer-sponsored pension plans, according to data released by Pensions and investments. Its members have created an independent entity, Portability Services Network, LLC (PSN), which will use Retirement Clearinghouse’s automatic portability solution to create a national digital hub connecting workplace pension archivists and plan sponsors who ‘they serve. PSN will act as a clearing house to automatically locate a participant’s active workplace retirement account in their current employer’s plan and transfer the same participant’s account from their previous employer’s plan to their active account.
In addition to Alight, Vanguard and Fidelity, the portability services network will be majority-owned by RCH with Mr Johnson as chairman, and is designed to include up to three additional key ledgers as owners. PSN owners will govern the network as an industrial utility designed to operate at the lowest cost for workers participating in automotive portability. The PSN is open to all archivists to log on. Registrants who own or participate in PSN will not receive any compensation for facilitating participants’ automatic portability transactions. For more information, please visit https://info.rch1.com/request-psn-info or email sales@RCH1.com.
About Alight Solutions
Alight Inc. (NYSE: ALIT), a leading provider of cloud-based human capital technologies and services.
About the Retirement Information Center
Retirement Clearinghouse, LLC is the leading provider of portability and consolidation services for defined contribution plans, acting as a trusted and impartial intermediary between plan sponsors, participants, recorders 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 allow participants, regardless of account balance, to carry their retirement savings in full transparency at each stage of their career. These solutions include a national call center providing expert support designed to enable end-to-end portability and account consolidation; uncashed check services; and the ability to search for lost or missing participants.
Retirement Clearinghouse works with over 34,000 retirement plans and has helped guide over 1.8 million plan members with over $28 billion in retirement savings. Retirement Clearinghouse is a holding company of The RLJ Companies, founded by Robert L. Johnson. For more information, visit www.rch1.com.
About Fidelity Investments
Fidelity’s mission is to inspire a better future and deliver better results for the customers and businesses we serve. With assets under administration of $9.9 trillion, including discretionary assets of $3.7 trillion as of June 30, 2022, we are focused on meeting the unique needs of a diverse set of clients. Privately owned for more than 75 years, Fidelity employs more than 58,000 associates who are focused on the long-term success of our clients. For more information about Fidelity Investments, visit https://www.fidelity.com/about-fidelity/our-company.
Founded in 1975, Vanguard is one of the world’s leading investment management companies. The firm offers investment, advisory and retirement services to individual investors, institutions and finance professionals. Vanguard operates under a unique investor-owned structure where shareholders of Vanguard funds own the funds, which in turn own Vanguard. As such, Vanguard adheres to a simple goal: to stand up for all investors, treat them fairly, and give them the best chance for investment success. For more information, visit vanguard.com.
JConnelly for the Clearinghouse Retreat