Principal Joins Portability Services Network
Consortium now has representation from the country’s five largest plan sponsors.
Principal Financial Group announced it has joined the Portability Services Network LLC, a consortium of retirement plan service providers seeking to help workers with lower balances transfer their workplace retirement accounts when changing employers.
The addition of Principal means the country’s five largest recordkeepers by assets are now part of the network, adding to Fidelity Investments, Empower, Vanguard and Alight Solutions, according to the latest ranking by PLANSPONSOR. After Empower joined in February, TIAA, the country’s largest 403(b) recordkeeper, joined the network in April.
As a board member and one of seven owning members of PSN, Principal will utilize the auto-portability solution developed by Retirement Clearinghouse, according to the announcement Thursday.
“As a retirement leader, it’s our responsibility and commitment to help create the best possible retirement outcomes for America’s workers, including making it easy for their retirement savings to move with them,” Teresa Hassara, Principal’s senior vice president for retirement and income solutions, said in a statement. “Being a part of the Portability Services Network adds another tool to the toolbox we have at Principal to support individuals on their paths to achieving financial security.”
By automating the process, the PSN hopes that workers will be able to transfer their assets into various retirement accounts such as 401(k), 401(a), 403(b) and 457 plans without unnecessary complications. This streamlined approach can reduce premature plan cash-outs and promote financial security, according to PSN.
“[Principal’s] leadership, action, and progress to increase financial access and inclusion will help more people benefit from auto-portability—in particular people of color, lower-income workers, and women, who have higher than average cash-out rates,” Robert Johnson, chairman of PSN and Retirement Clearinghouse, said in a statement.
PSN currently represents about 82 million workers across more than 185,000 employer-sponsored retirement plans. Principal brings an additional 11 million retirement plan participants and more than 46,000 plans to the coalition, according to the announcement.
The network is building a recordkeeper base even as the SECURE 2.0 Act of 2022 called on the Department of Labor to create a centralized retirement account “lost and found” for American workers. The DOL has said it is looking into the best approach to create this database.