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: Sen. Scott, Tim [R-SC]
Target Audience
Population: employees with retirement accounts switching jobs
Estimated Size: 30000000
- The bill targets employed individuals who have retirement accounts, as it allows them to transfer these accounts upon changing jobs.
- According to the U.S. Bureau of Labor Statistics, as of September 2021, there were approximately 164 million people in the civilian labor force in the United States. This includes those already employed who may benefit from automatic portability.
- The bill also affects employers, offering them a tax credit incentive to adopt automatic portability arrangements.
- Not all members of the labor force will switch jobs or have retirement accounts, so the exact number will be a subset of this total figure.
- Globally, the number of employed individuals, as reported by the International Labour Organization (ILO), was estimated to be over 3 billion individuals in 2021.
- The global impact will be on those with retirement accounts and the ability to change jobs, primarily in countries with similar retirement systems as the U.S.
Reasoning
- The policy aims to ease the process of transferring retirement accounts when employees change jobs, with the potential to affect up to 30 million people who change jobs annually and have retirement accounts.
- Given a population of 164 million employed people, we estimated that about 20% change jobs in a year, and within that group, those with retirement accounts are the prime targets.
- Most affected will be individuals who frequently change jobs and have existing retirement accounts, as well as employers who stand to benefit from the tax credit.
- The policy will not impact those who are unemployed, self-employed without formal retirement accounts, or those who do not change jobs.
- Under the policy, an individual’s financial stability might improve over time due to maintained retirement savings momentum.
Simulated Interviews
Marketing Specialist (Chicago, IL)
Age: 35 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- This policy could simplify my job transitions and ensure my retirement savings stay on track.
- I worry slightly about any hidden fees that might come with automatic transfers.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 7 |
Software Engineer (San Francisco, CA)
Age: 28 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- I'm in favor of the policy since it reduces the hassle of dealing with my retirement account during frequent job changes.
- I appreciate getting a heads-up before any transfer happens.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 9 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 10 | 8 |
| Year 20 | 10 | 8 |
Human Resources Manager (New York, NY)
Age: 45 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 15/20
Statement of Opinion:
- While the policy is positive for employees who switch jobs, it won't impact me personally.
- I see potential benefits for our company if we adopt the plan and receive tax credits.
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 | 8 | 8 |
Logistics Supervisor (Atlanta, GA)
Age: 50 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 13/20
Statement of Opinion:
- The policy's automatic transfer features are commendable, though I have no plans to change jobs soon.
- I see it as advantageous for those earlier in their careers.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Freelancer (Austin, TX)
Age: 32 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 8/20
Statement of Opinion:
- As a freelancer, the policy won't affect me, but it's a step forward for traditional employees.
- Since I manage my finances, the impact is neutral compared to those employed with an organization.
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 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Teacher (Seattle, WA)
Age: 29 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 14/20
Statement of Opinion:
- Automatic portability doesn't apply much to my pension-based retirement in education.
- For private sector friends, however, it seems quite beneficial.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Financial Advisor (Houston, TX)
Age: 39 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- This policy is advantageous for reducing retirement savings leakage as people switch jobs.
- Helping my clients keep their savings intact when transitioning between jobs is a success in my view.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Construction Manager (Denver, CO)
Age: 53 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 1.0 years
Commonness: 11/20
Statement of Opinion:
- I don't foresee a need for the policy in my situation, but it's good for the younger workforce.
- It can keep people's savings on track which is definitely positive.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Chef (Miami, FL)
Age: 40 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- I'd rather not think about my retirement moving every time I switch jobs, so this policy is great.
- Need more clarity on what happens if an employer doesn't participate.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Project Manager (Phoenix, AZ)
Age: 37 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 13/20
Statement of Opinion:
- I think this is a thoughtful policy to help people manage retirement better upon changing jobs.
- Orchestrating multiple accounts can be cumbersome.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Cost Estimates
Year 1: $300000000 (Low: $200000000, High: $400000000)
Year 2: $150000000 (Low: $100000000, High: $200000000)
Year 3: $150000000 (Low: $100000000, High: $200000000)
Year 5: $150000000 (Low: $100000000, High: $200000000)
Year 10: $150000000 (Low: $100000000, High: $200000000)
Year 100: $150000000 (Low: $100000000, High: $200000000)
Key Considerations
- Variability in the number of employers who choose to adopt auto portability.
- Potential administrative burden on automatic portability providers that could affect compliance costs.