Recordkeeper and third-party administrator Alliance BenefitGroup of Illinois is teaming up with Retirement Clearinghouse, LLCto deliver managed portability solutions for participants in theplans it services.

Read: Cashouts, loans responsible for retirementoutflows

ABGI will provide front-office portability resources toparticipants, as well as information on the benefits ofconsolidating retirement savings in their current employers'plans.

When a participant elects to take advantage of managedportability solutions to do so, Retirement Clearinghouse willprovide assistance with locating, transporting, and consolidatingretirement savings accounts.

ABGI is making Retirement Clearinghouse’s managed portabilityservices available at no cost to participants.

The average worker changes jobs 7.4 times in her career,and loads of those workers cash out retirement plans when theyswitch employers, rather than leaving money in a previousemployer’s 401(k) plan.

That has two negative effects—one for participants and one forsponsors. Participants suffer because cashouts result in lowerretirement yields when the time comes to leave employment forgood.

Lost retirement savings annually amount to some $74 billionacross the country’s retirement system, with 89 percent of that“leakage” due to cashouts.

The Employee Benefit Research Institute (EBRI) estimates thatcutting overall leakage by 50 percent would add $1.3 trillion inassets to Americans’ total retirement savings over the course of 10years.

Sponsors suffer (and, in turn, participants do so again) becausewithdrawing the money, rather than transferring it, boosts thecosts for employer retirement plans.

While auto enrollment will place that new worker into aretirement plan, the balance will be far smaller than if shetransferred the balance from a previous job.

According to EBRI, in 2012, roughly 40 percent of retirementplan accounts had balances below $10,000.

And all those small accounts translate to higher administrativefees and lower average account balances for sponsors.