Empower joins group to ensure portability of retirement savings

Retirement accounting firm Empower announced on Monday that it has joined the Portability Services Network, an account group that includes Alight, Fidelity and Vanguard working to advance the automatic portability of defined contribution plan assets.

The network uses Retirement Clearinghouse to create a digital hub that connects accounts and retirement plan sponsors and allows them to automatically transfer account balances less than $5,000 in 401(k), 401(a), 403(b), and 457 plans when workers change work.

The Worker Benefits Research Institute estimates that about $92 billion of assets are pulled out of retirement plans every year because workers who change jobs are cashed out. Research shows that workers with less than $5,000 in their plan are more likely to cash out than those with larger balances. If autoportability were widely available, the EBRI estimates that US retirement savings could increase by $1.5 trillion over 40 years.

“Empower is a welcome addition to a consortium of registrars that includes Vanguard, Fidelity and Alight, and they are working together to enable low-income and undersaved American workers to achieve financial security in retirement — and close the retirement savings gap that is plaguing our country. minority communities,” Robert L. Johnson, chairman of the Portability Services Network and Retirement Clearinghouse, said in a statement.

According to the statement, the consortium currently represents about 43.8 million workers enrolled in the company’s more than 48,000 pension plans, and Empower will add about 17 million members to more than 70,000 plans. The service is expected to launch for plans managed by Empower in the first quarter of 2025.

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