"Making it easier for workers to build savings will alleviate stress for families and ensure every person has the opportunity to retire with dignity, regardless of their income or economic status," Mr. Scott said in a news release. "I encourage my colleagues to join me in supporting this bipartisan, commonsense legislation that will create a more secure financial future for countless Americans."
An automatic-portability provider must acknowledge in writing that it is a fiduciary on auto-portability transactions; its fees "shall not exceed reasonable compensation and must be approved in writing by the plan fiduciary;" and it "shall not market or sell data relating to the individual retirement plan," the bill states.
"When work has dignity, people have peace of mind that they'll have a secure retirement," Mr. Brown said in the news release. "This is a simple solution that allows Ohio workers to change jobs and take their retirement savings with them."
The bill has earned support from a wide swath of the retirement industry, including from Retirement Clearinghouse, which has developed an auto-portability service and in 2019 received a green light from the Department of Labor to expand its program.
"This legislation recognizes that cash-out leakage — driven by the frictions prevalent in moving money between plans in our country's retirement system — is adversely affecting Americans' retirement outcomes in a very big way," said Spencer Williams, founder, president and CEO of RCH, in a statement.
He added, "401(k) savings portability will institute a new default in plan designs, which will enable participants to opt out of having their small balances automatically moved to their new employers' plans when they change jobs, instead of having to opt in. Senators Scott and Brown have crafted legislation which would make this default available to all plans across the U.S. retirement system — a huge win for America's hardworking retirement-savers."
Currently, plan sponsors are permitted by law to kick out small accounts with balances under $5,000 when workers leave by offering them an option to either cash out their balances or transfer the funds to an individual retirement account or the worker's new employer's plan.