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Press Releases by Date   |   Press Releases by Company Name


View More Press Releases by Empower

Press Release

Empower Joins New Consortium to Accelerate Adoption of Auto Portability

Issued by Empower

Feb. 14, 2023

Portability Services Network focuses on retirement outcomes of the nation’s under-served and under-saved workers

GREENWOOD VILLAGE, Colo. -- Empower will join forces with the Retirement Clearinghouse, LLC (RCH) and other leading retirement services providers in a new consortium to accelerate the nationwide adoption of auto-portability to help more American workers improve their retirement outcomes.

 

Under the new consortium, called the Portability Services Network, LLC (PSN), workers with lower balances who change employers can have their workplace retirement savings automatically moved to their new retirement plans.

Automating the process of moving assets in 401(k), 401(a), 403(b), and 457 accounts from plan to plan when workers change jobs will help mitigate plan cash-out and potentially preserve trillions of dollars in savings in the U.S. retirement system.

“Advancing auto-portability adoption across the retirement system provides workers with the best chance to harness the power of all the assets they have earned through their workplace savings plans,” said Empower President and CEO Edmund F. Murphy III. “The creation of this consortium will ultimately be a great benefit to many workers and Empower is thrilled to join with RCH and our industry peers to advance this important initiative.”

“Empower is a welcome addition to the consortium of recordkeepers that includes Vanguard, Fidelity and Alight, and are working together to enable under-served and under-saved American workers pursue financial security in retirement — and close the gap in retirement savings that plagues our minority communities,” said Robert L. Johnson, Chairman of The RLJ Companies and Chairman of Portability Services Network and Retirement Clearinghouse. “We look forward to working closely with Empower as they implement RCH’s innovative technology and offer auto-portability to their plan sponsor clients.”

According to Retirement Clearinghouse, the need for auto portability has been driven by the lack of seamless plan-to-plan savings portability amid a highly mobile workforce. Approximately $92 billion in savings leaves the U.S. retirement system every year because Americans who switch jobs prematurely cash out their workplace retirement accounts and pay taxes and penalties on those cash-outs, according to Employee Benefit Research Institute (EBRI) data cited by RCH. 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 other job-changing workers.1 Within this cohort, 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. 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.1

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. Empower will add approximately 17 million retirement plan participants in more than 70,000 plans.2

The consortium members established PSN to utilize Retirement Clearinghouse’s auto portability solution to build a nationwide digital hub connecting workplace retirement plan recordkeepers and the plan sponsors they serve. PSN will act as a clearinghouse for automatically locating a participant’s active workplace retirement account in their current employer’s plan and transferring the same participant’s account from their prior employer’s plan into their active account. The new service is expected to go live for participants in plans under Empower’s administration in the first quarter of 2025.

The Portability Services Network will be majority owned by RCH with Robert Johnson as its chairman and is designed to include up to six recordkeepers as owners, a group which now includes Empower. PSN’s owners will govern the network as an industry utility designed with the goal of operating at the lowest cost to workers participating in auto portability. PSN is open to all recordkeepers to connect. The recordkeepers that own or participate in PSN will not receive any compensation for facilitating auto portability transactions from participants.

About Empower

Empower is a leading provider of financial services including advice, wealth management, investing and retirement services. Headquartered in Greenwood Village, Colorado, Empower administers approximately $1.2 trillion in assets2 for more than 17 million investors.3 Connect with us on empower.com, Facebook, Twitter, LinkedIn, Tik Tok and Instagram.

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, 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.

About Portability Services Network

Portability Services Network, LLC (PSN) is an independent, industry-led utility which utilizes the Retirement Clearinghouse (RCH) auto portability solution to build a nationwide, digital hub connecting workplace retirement plan recordkeepers and the plan sponsors they serve that elect the auto portability service. For PSN member recordkeepers and the plans that have elected the auto portability solution, PSN acts as a clearinghouse for automatically locating a participant’s active 401(k), 401(a), 403(b) or 457 account in their current employer’s plan and transferring the same participant’s account (under $5,000) from their prior employer’s plan into their active account. For more information, please visit https://psn1.com/.

1 Press release: America’s Leading 401(k) Providers and Retirement Clearinghouse Collaborate to Implement a Nationwide Network for Auto Portability (rch1.com).

2 As of Sept. 30, 2022. Information refers to all retirement business of Empower Annuity Insurance Company of America (EAIC) and its subsidiaries, including Empower Retirement, LLC; Empower Life & Annuity Insurance Company of New York (ELAINY); and Empower Annuity Insurance Company (EIC), marketed under the Empower brand. EAIC’s consolidated total assets under administration (AUA) were $1,240.5B. AUA is a non-GAAP measure and does not reflect the financial stability or strength of a company. As of Sept. 30, 2022, EAIC’s statutory assets total $76.1B and liabilities total $73.0B. ELAINY’s statutory assets total $7.0B and liabilities total $6.7B. EIC’s statutory assets total $80.7B and liabilities total $79.6B.

3 Pensions & Investments 2021 Defined Contribution Survey Ranking as of April 2022.

On August 1, 2022, Empower announced that it is changing the names of various companies within its corporate group to align the names with the Empower brand. For more information regarding the name changes, please visit empower.com/name-change.

Securities, when presented, are offered and/or distributed by Empower Financial Services, Inc., Member FINRA/SIPC. EFSI is an affiliate of Empower Retirement, LLC; Empower Funds, Inc.; and registered investment adviser Empower Advisory Group, LLC. This material is for informational purposes only and is not intended to provide investment, legal, or tax recommendations or advice.

Empower refers to the products and services offered by Empower Annuity Insurance Company of America and its subsidiaries. “EMPOWER” and all associated logos and product names are trademarks of Empower Annuity Insurance Company of America.

©2023 Empower Annuity Insurance Company of America. All rights reserved. WF-236345-0223 RO-2733417-0223

Learn More:

To learn more about how we’re empowering plan sponsors and their participants to be more engaged in their retirement plans than ever before, call us at 800-719-9914.

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Editor's note: This press release has been issued by the company named above, not BenefitsLink. Reliance on information in this press release might be prudent only after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by BenefitsLink.