The PSN will act as a clearinghouse. It automatically locates a participant’s active workplace retirement account in their new employer’s plan and transfers the same participant’s old account from their prior employer’s plan into their active account with their new employer.
The PSN includes a consortium of record keepers including Alight, Empower, Fidelity, and Vanguard. It became operational in Q1 2023 and already covers 71 million workers across 143,00 employer-sponsored plans.3 In addition to helping employees, employers can greatly benefit from the PSN by reducing administrative expenses.
Moving to a new job or switching careers is a stressful life event, so offloading the mental strain of deciding on your retirement account can make a difference. Just like how automatic enrollment helps employees start saving for retirement to make the right decision with minimal friction, the PSN aims to do the same.
It is important to regularly remind ourselves of the purpose of the workplace retirement plan—to get employees on track for retirement. They can’t be prepared for retirement when they cash out their account early. It is incumbent upon retirement plan fiduciaries to do all they can to provide a plan that helps improve the financial security of their workers.
If you are a fiduciary considering joining the PSN, talk with your recordkeeper about the benefits it can have for your people. At PCI, we believe this network can be a great opportunity to make an impact and improve retirement readiness outcomes for employees.
