The U.S. retirement system has made significant progress in helping workers save through automatic enrollment, automatic escalation, and target-date investment defaults. Yet despite these advances, a critical challenge remains unresolved: retirement savings leakage during job transitions. For many participants, particularly those with small balances, liquidating retirement savings has often been simpler than navigating a complex rollover process. According to the Employee Benefit Research Institute (EBRI), about 40% of terminated participants cash out retirement assets, contributing more than $90 billion in retirement savings leakage annually.
Auto portability is emerging as one of the retirement industry's most promising solutions to this long-standing challenge. It automatically transfers participants’ small-balance retirement savings from a former employer plan to an active account with a new employer. As recordkeepers, plan sponsors, and policymakers recognize their ability to retain retirement savings, auto portability adoption has accelerated. During 2025, plan adoption increased by approximately 40%, while participant coverage grew by 52%.
The Retirement Savings Leakage Challenge
The challenge stems from a fundamental mismatch between today's workforce and the retirement system's original design.
These transitions create multiple risks like:
The issue is especially acute among participants with balances below $7,000, who are more likely to withdraw assets when changing jobs.
EBRI estimates that assets held in these Safe Harbor IRAs could grow from approximately $28.4 billion in 2025 to more than $43 billion by 2030, highlighting the growing amount of retirement savings that may remain trapped in low-yield accounts instead of being rolled into active 401(k) plans with greater long-term growth potential.
As workers accumulate retirement accounts across multiple employers, tracking, managing, and consolidating savings become increasingly complex. The result is a fragmented retirement landscape, where forgotten accounts and inefficient investment outcomes can weaken long-term wealth accumulation and retirement readiness.During H1’26, global equity capital markets (ECM) activity reached USD569 billion, up 72% YoY, marking the strongest first-half performance in five years. The US issuance remained the primary driver of global ECM activity, contributing 53% of total proceeds (USD302 billion), more than twice the prior year's level, while China ECM activity grew 35% YoY to USD 78 billion. Global IPO proceeds (excluding SPACs) reached USD 170 billion, more than triple the level recorded a year ago and the strongest period for global IPO activity since 2021. IPO proceeds on US exchanges reached USD127 billion, more than seven times H1’25 levels and a five-year high. Follow-on offerings totaled USD270 billion, up 28% YoY, recording the strongest quarter since 2021. Convertible issuance reached USD129 billion, up 78% YoY and all-time high, accounting for 23% of total ECM activity. The technology, industrials, and energy & power sectors dominated convertible issuance, together representing approximately 69% of total convertible volumes in H1’26.
The Emergence of Retirement Infrastructure
The rapid growth of auto portability is being driven by the emergence of industry-wide infrastructure designed to support seamless account transfers. The most notable development has been the creation of the PSN, a consortium that includes major retirement recordkeepers such as Fidelity, Vanguard, Empower, Principal, TIAA, and Alight.
These firms collectively represent nearly 63% of defined contribution participants. More than 22,000 plan sponsors have adopted auto portability solutions representing over 6.8 million workers.
The primary objective of PSN is to create a standardized, secure, and scalable infrastructure that enables retirement assets to follow workers as they change jobs. Through its "locate, match, and transfer" framework, PSN connects participating recordkeepers, identifies eligible participant accounts across employer plans, and facilitates the automatic transfer of small-balance retirement savings into a participant’s active retirement account. By enabling seamless account transfers across participating plans, PSN is creating a more connected retirement ecosystem while reducing administrative friction, minimizing abandoned accounts, and preserving retirement assets within the retirement system.
Why Auto Portability Matters
Auto portability represents a structural shift in how the retirement industry approaches participant transitions. Rather than allowing balances to exit the system, savings remain invested and connected to the participants throughout their career.
The most significant benefit is improved retirement security. Auto portability helps preserve tax-advantaged retirement assets, minimizes premature withdrawals and consolidates savings into a single active account. It also streamlines account management by making accounts easier to oversee and manage over the long run.
Auto portability benefits the plan sponsor by improving participant outcomes and reducing administrative burden. Consolidated accounts help reduce inactive participants, minimize missing participant issues, decrease uncashed checks, and streamline plan operations. Sponsors may also benefit from larger average account balances, a key indicator when assessing plan health and negotiating fees with service providers
Retaining assets within qualified plans rather than exiting the system enables recordkeepers to build an efficient retirement landscape. Simultaneously, auto portability reduces the number of small-balance and inactive accounts that are often expensive to maintain, improving operational efficiency while strengthening long-term participant engagement
A Stronger Regulatory Foundation
The growth of auto portability has been facilitated by a range of bipartisan legislative and regulatory initiatives.
- Advancing Auto Portability Act was introduced in June 2022 to establish rules for an industrywide portability network and provide tax incentives for plan sponsors adopting auto portability
- SECURE 2.0 reinforced Congress's commitment to helping Americans save more effectively for retirement and included provisions supporting automatic portability. SECURE 2.0 also increased the involuntary cash-out threshold from $5,000 to $7,000 beginning in 2024. This increased threshold broadens the number of participants who can benefit from portability solutions and subsequent account consolidation
- Department of Labor Guidance In 2024, the U.S. Department of Labor issued proposed regulations for automatic portability transactions. The proposed framework addresses fiduciary responsibilities, fee disclosures, data protection requirements, and consumer safeguards, providing a stronger foundation for scaling portability services across the retirement industry
Industry Adoption Gains Momentum
Major retirement providers have already rolled out auto portability as part of their retirement product offerings:
| Firm | Details |
|---|---|
|
Fidelity reported that more than 9,200 workplace retirement plans had adopted auto portability, covering nearly 3.7 million active participants within the network. The firm also disclosed that over $24 million of retirement savings has been preserved through Fidelity-sponsored rollovers |
|
Vanguard has also expanded its collaboration with Retirement Clearinghouse beyond workplace retirement plans, driving initiatives focused on reconnecting IRA holders with forgotten retirement assets and facilitating broader account consolidation efforts |
With more providers entering the network and large plan sponsors completing due diligence reviews, auto portability is likely to become an increasingly important component of retirement plan design.
The Road Ahead
Auto portability represents a fundamental shift from manually managed retirement transitions toward a connected retirement ecosystem where savings move seamlessly with workers throughout their careers.
The significance of the trend extends beyond reducing cashouts. Auto portability helps address three persistent industry challenges simultaneously:
As portability networks expand and regulatory support strengthens, automatic transfers may become as fundamental to retirement plan design as automatic enrollment is today.
The long-term winners will be providers that successfully integrate portability capabilities into broader participant engagement, rollover, retention, and retirement-income strategies while leveraging data, automation, and ecosystem partnerships to create a more connected participant experience.
How Evalueserve Can Help
Evalueserve provides comprehensive market and competitive intelligence solutions to retirement providers, helping them gain timely access to relevant and actionable insights. Here’s how Evalueserve can assist clients in this area:
- Market and Competitive Intelligence: Track recordkeeper adoption, portability network expansion, product innovation, and competitive positioning to identify emerging opportunities and market shifts
- Product and Strategy Benchmarking: Evaluate how leading retirement providers are incorporating auto portability into broader participant engagement, rollover, and consolidation strategies
- Regulatory and Policy Monitoring: Monitor SECURE 2.0 implementation, Department of Labor guidance, fiduciary requirements, and future legislative developments affecting retirement portability
Sources:
- EBRI, The Impact of Auto Portability on Preserving Retirement Savings Currently Lost to 401(k) Cashout Leakage
- Plan Sponsor, Nearly 21,000 Plan Sponsors Have Adopted PSN Auto-Portability
- PSCA, Auto-Portability is Taking Off with Larger Plans
- Retirement Clearinghouse, The Plan Sponsor Case for Auto Portability
- Portability Services Network, Auto Portability - Frequently-Asked Questions (FAQs)
- GlobeNewswire, Hidden ‘Junk IRAs’ To Threaten $43 Billion in American Retirement Savings by 2030
- DOL, Department of Labor releases proposed regulation on retirement plans and automatic portability transactions when employees change jobs
- Federal Register, Automatic Portability Transaction Regulations
- Fidelity Investments Q3 2025 Retirement Analysis
- Plan Adviser, Vanguard Expands Retirement Clearinghouse Eligibility to IRA Account Holders
- NAPA, Larger 401(k) Plans Embrace Auto Portability as Due Diligence Drives Confidence
