The adoption of auto-portability for American workers' retirement funds could result in an additional $1.5 trillion in retirement savings—money that is currently leaking out of the system when workers change jobs and cash out of their defined contribution (DC) plans.

This year will mark changes to the retirement savings system, in part due to the new SECURE 2.0 law, that will enable more auto-portability of 401(k) retirement accounts, the Portability Services Network (PSN) and Retirement Clearinghouse (RCH) recently said. The two organizations are part of a public-private partnership to oversee the auto-portability system. The partnership has been working on data sharing and fund transfer capabilities, and includes industry groups such as Alight Solutions, Empower, Fidelity Investments, Principal, TIAA, and Vanguard.

In 2022, Fidelity estimated that $92 billion in savings is lost from the U.S. retirement system annually because Americans who change employment cash out of their low-balance retirement funds or receive an automatic payout without rolling those savings into a new DC plan. Fidelity noted that these lower-balance savings plans were predominately owned by minorities, women, lower-income, and younger workers in the U.S.