Bill Overview
Title: Advancing Auto-Portability Act of 2022
Description: This bill allows employees to transfer their retirement account upon terminating their employment to a similar account with a new employer. Specifically, it makes such transfers automatic, subject to the right of employees to opt out. It imposes certain requirements upon an automatic portability provider, including a requirement that the provider acknowledge its fiduciary status and provide a notice in advance to an employee whose retirement account is being transferred that contains a description of the automatic portability transaction and any fees charged in connection with the transaction. This bill also allows an eligible employer a $500 tax credit in the year that an automatic portability arrangement is adopted.
Sponsors: Rep. Schneider, Bradley Scott [D-IL-10]
Target Audience
Population: Employees with retirement accounts changing jobs
Estimated Size: 30000000
- Employees who change jobs and have existing retirement accounts will be directly impacted as the bill facilitates the automatic transfer of their retirement savings to new employer accounts.
- Current employees who may change jobs in the future will also be impacted as the system set up by this bill will apply to them once they switch jobs.
- Employers will be affected because they can receive a $500 tax credit for adopting the automatic portability arrangement.
- Financial service providers engaged as automatic portability providers are impacted as they will have fiduciary responsibilities under the new law.
Reasoning
- The policy will primarily affect employees who switch jobs and have retirement accounts by facilitating easier retirement account consolidation.
- Younger individuals with a history of job changes are more likely to be affected and potentially benefit from the policy.
- The policy will have minimal to no direct impact on employees who are not planning job changes or do not have retirement accounts.
- Employers adopting the system may see some financial benefit through tax credits, although the direct impact on employees' wellbeing is the primary focus.
- Financial service providers might be indirectly affected due to the fiduciary requirements, impacting their operations rather than individual employee wellbeing.
Simulated Interviews
Software Engineer (Austin, TX)
Age: 29 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 12/20
Statement of Opinion:
- I frequently change jobs for better opportunities, and managing my retirement accounts can be tedious.
- The idea of automatic transfer sounds good as long as I'm informed and can opt out.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Financial Analyst (Chicago, IL)
Age: 52 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 15/20
Statement of Opinion:
- Since I'm not planning any job changes, this policy won't impact me.
- I see this as a positive change for those in more dynamic career paths.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 7 | 7 |
Nurse (New York, NY)
Age: 41 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 10/20
Statement of Opinion:
- The policy would make managing my retirement funds easier, especially after recent job change.
- It would save me time having to manually handle rollovers.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 3 |
Sales Associate (San Francisco, CA)
Age: 25 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 14/20
Statement of Opinion:
- I'm just starting out, so the policy doesn't currently impact me.
- Knowing this will be in place when I do start saving for retirement is reassuring.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Accountant (Miami, FL)
Age: 60 | Gender: female
Wellbeing Before Policy: 9
Duration of Impact: 0.0 years
Commonness: 16/20
Statement of Opinion:
- I don't see any benefits from the policy since I've already retired.
- For working folks, it seems like a useful policy.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 9 |
| Year 3 | 9 | 9 |
| Year 5 | 9 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Freelance Artist (Seattle, WA)
Age: 38 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 5/20
Statement of Opinion:
- Since I freelance and manage my own savings, the policy doesn't affect me.
- If I were full-time, it seems practical.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 4 |
Teacher (Charlotte, NC)
Age: 34 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- I support this policy as it simplifies managing my multiple retirement accounts.
- It helps improve financial stability by consolidating accounts.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Construction Manager (Denver, CO)
Age: 46 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 9/20
Statement of Opinion:
- This policy is a relief as it will make transitioning to my new job much easier.
- It reduces stress related to managing retirement funds during job switches.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Small Business Owner (Phoenix, AZ)
Age: 55 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 8/20
Statement of Opinion:
- I see the benefits for employees, but it doesn't apply to my situation.
- Hopefully, it encourages more fluid retirement savings management in the workforce.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 7 | 7 |
Marketing Specialist (Boston, MA)
Age: 30 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 11/20
Statement of Opinion:
- In the rush of starting a new job, I forgot about my old retirement account.
- The policy would help ensure I keep track of it automatically.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Cost Estimates
Year 1: $295000000 (Low: $200000000, High: $350000000)
Year 2: $295000000 (Low: $200000000, High: $350000000)
Year 3: $295000000 (Low: $200000000, High: $350000000)
Year 5: $295000000 (Low: $200000000, High: $350000000)
Year 10: $295000000 (Low: $200000000, High: $350000000)
Year 100: $295000000 (Low: $200000000, High: $350000000)
Key Considerations
- The prevalence and participation level of employers adopting the auto-portability feature will highly influence the cost and savings outcomes.
- The effect on tax revenue will rely on both predicted adoption rates and the behavior of employers and financial service providers.
- Long-term effects on GDP depend on improved efficiency and liquidity in retirement savings.