A key contributor to the existing U.S. retirement deficit is leakage from 401(k) plans upon job change. While overall, U.S. Department of Labor data indicate that loan amounts tend to be a negligible portion of total plan assets, EBRI research has shown that defaulting on retirement plan loans can produce significant reductions in retirement balances. One approach to reducing such leakage is to add some type of automatically enrolled 401(k) loan insurance that prevents defaults.
In this study we used the accumulation module of the Retirement Security Projection Model® (RSPM) to simulate the increase in the present value of the 401(k) account balances with and without the automatically enrolled loan protection program. We used these results to simulate the aggregated present value of the improvement in plan balance for all current 401(k) participants assumed to have at least one loan default in the baseline scenario. Basing our analysis on assumptions from Lu et al., the resulting increase in the present value of balances is $1.96 trillion, representing up to 40 years of loan default experience.
® C Va re nD dite r ahe re i,p Ja roje ckc, t“ eRe d tto ire ha mv ee n ta Sa mv aings Shor terial imptafa ctlls on : Erveide duc nc ing e fr re om tir eEm Be RI nt ’s 201 savings shor 9 Retirem tfa ell nt s w Se he cur n a ity na Ply roje zed c tfo ion M r hous ode el, hold ” s R C Endno o enc sults lus te ion s Jack VanDerhei is Director of Research at the Employee Benefit Research Institute (EBRI). This Issue Brief was written The Impact of Adding an Automatically Enrolled Loan Protection ® simula EBtRI ed Itss o ue ha vBer ie a fr, eno. tirem 47e5 (E nt dm efic ploy it. eFor e B e those nefit c Re ursea rent rc ly h I ag ns ets 35 itute –, 39 Ma , trhe ch 7, red20 uc19 tions ). in retirement deficits vary from with a EB ssR istI a nR cee fr tir om e m thee Int nst it S ut eecu ’s rr eity sear c P h a ro nd jee ct dition M orial stao ffde s. Alny ( vR iew Ss e PM xpr ) eM sse edt ho in th do is rlogy eport are those of the The The im pre psent act of valoa luen d of et fa he ult cs on ombine retd ir e 40 m1( ent k) sa and vings is signifi IRA rolloverc a ant cc ount whe n com balanc pe as a redt w ag ite h 65 ot he we r rE eB out RI p re ut se , aarnd ch a the nd sa the m e 17 to 26 percent, depending on race. This combination has an even larger impact when considering households who 1 aP utr hor og and ra sh m ould t o not 4 b0 e a1 sc(rk ibe)d P to lta hen offic s ers, trustees, or other sponsors of EBRI, Employee Benefit Research VanDerhei (April 2020). While that number may seem extraordinarily large, it must be remembered that this applies to all si ov m eula rall r tion w etirea m s r ent un a dess ficum it for ing a tll U he .S. authous omat eic hold allys. enr Acolle cord d in loa g n p to our rote a ctnion p alysis, p rogrra em ve nt wa ing s in p leala ka cg ee . A frltom houg the h tsy he st c eos m tt hr of oug theh ® VanDerhei, Jack, “Retirement Savings Shortfalls for Today's Workers,” EBRI Notes, vol. 31, no. 10 (Employee Benefit One of the basic objectives of RSPM is to simulate the percentage of the population at risk of NOT having are not simulated to have a retirement deficit. Moreover, the addition of employer matches on student loans or using Institute-Education and Research Fund (EBRI-ERF), or their staffs. Neither EBRI nor EBRI-ERF lobbies or takes positions U.S. households in that age range, whether they work for employers that sponsor retirement plans or not. The baseline a the ut om use a tof icaloa lly n insu enrolle ra dnc loa e n ov pe rr ot ae c 40 tion p -yearrog pe ra riod m — re su whic lts in h is a an inc ssum reeadse to in t behe pa p id r eb sent y the v a elue mp loy of 40 ee1( in t k)his and sim rollov ulation er I RA at a February 24, 2022 • No. 551 Research Institute, October 2010). retirement income to adequately cover average expenses and uninsured health care costs (including long-term- the “skinny” 401(k) for ACPA can add up to another 4 percent reduction in retirement deficits. Auto portability can add By Jack VanDerhei, Ph.D., Employee Benefit Research Institute on specific policy proposals. EBRI invites comment on this research. scenario for this number also assumes Social Security retirement benefits are paid as currently calculated. For sensitivity c bost ala nc ofe 0.1 s of 78 $1 p.96 t ercernt ill ion for of the or those iginasi l b ma ula lanc tee d of to tha hev e loa an lo p aen d r m eont fault h . — Thi ws c ill d an g ecre o aa se long the w ac acyount to he blp ala ing nce re s for duc et hose the with ® care costs) at ages 65 or older throughout retirement in specific income and age groupings. RSPM also provides 11 to 14 percent, depending on race. We also find that the results are relatively robust to changes in assumptions for analysis assuming that a proportional reduction in these benefits takes place when the Social Security trust fund is exhausted, a p rloa esent n, tv he alue sim of ula re te tir de cm om ent bine ded fic 40 its for 1(k) U and .S. Ihous RA re ollov holdes. r a Rce csea ounrtc h fr bala om nc eD s a eloit t atg ee b 65 ased for on 40a 1( ne k)c d pot ara tic l d ipa atnt a s si from m ulated to VanDerhei, Jack, “How Would Target-Date Funds Likely Impact Future 401(k) Accumulations? Joint DOL/SEC Hearing: information on the distribution of the likely number of years before those at risk run short of money as well as the opt-out rates. see VanDerhei (March 2019). Suggested Citation: VanDerhei, Jack, " The Impact of Adding an Automatically Enrolled Loan Protection Program to ha recvor e d ak lo ee ap n ed rse fa conser ult in t vahe tiv e bly aseline estim a sc te ed na tr ha io tw 66 ill p be er inc cent re a of sed pa r bty ic :ipa nts who defaulted on their loan took their entire Target Date Fund Public Hearing,” June 18, 2009. Thpe er cI em ntap gea ofc pt re ro etf ir eA med ntd com inpg ens a atn ion t A he u yt w o illm nea edt in t icea rm ll s of y E adn ditr iona oll l sa ed vings in Loan orderP to rha ot vee ac 50 t, io 70n , Introduction 401(k) Plans,” EBRI Issue Brief, no. 551 (Employee Benefit Research Institute, February 24, 2022). account balance. Further, studies have also shown that Black and Hispanic workers have higher rates of loans and loan 2 VanD or e90 rhe p i e (r March cent p 2019) robab . ility of retirement income adequacy. TM • Retention of the account balance that would otherwise be defaulted in a retirement account. Measuring retirement security — or retirement income adequacy — is an extremely important topic. The Employee VanDerhei, Jack, and Craig Copeland, “The EBRI Retirement Readiness Rating: Retirement Income Preparation and defaults than White workers (Fellows and Willemin 2013). Program to 401(k) Plans Background ® Copyright Information: This report is copyrighted by the Employee Benefit Research Institute (EBRI). You may copy, Benefit Research Institute’s (EBRI’s) Retirement Security Projection Model (RSPM) has determined that the aggregate Future Prospects.” EBRI Issue Brief, no. 344 (Employee Benefit Research Institute, July 13, 2010). 3 Currently, there are several legislative proposals that would provide additional assistance. For EBRI simulations of the VanDerhei and Copeland (2010) describe how households are tracked through retirement age and how their • Retention of the remaining amount of the account balance for 66 percent of the participants who were print, or download this report solely for personal and noncommercial use, provided that all har1d copies retain any and One approach to reducing the retirement deficits that result from plan loan leakage is to automatically enroll A retttir em em pe ts t nt o dr ee fic duc it for e the all U exis .S. ting hous ree tir hold ems a entg d ee s 35 ficit– ha 64v a es of also Ja ta nua ken p ry 1, 2020 lace thr, oug wah ind s $3.6 us 8 trty rill inn ion. ov ations to mitigate the By Auto Ja mack Va tic ConnD tribution erhe Pi, laPh.D., n/Arrang E eme mplo nt (ACP yee A) Ben , enhe anc fite R d S eas ve era ’s rch I Credit, nsatnd itut alle o wing individuals to receive an employer retirement income/wealth is simulated for the 12 following components: simulated to have defaulted on their loan. 6 a Va ll c nD op ey rhe right i, Ja ac nd k, ot and her C r aa pig p lic Cop abe lela not nd,ic “eThe s cont Imapine actd of the Pr PeAin, a on nd Rety irou emm ent ay Ic nc ite om ore qfor uot 40 e sm 1(ka)ll p Paor rtic tions ipant of s,” the EB rRI ep or Iss t ue participants into a 401(k) loan insurance program to prevent defaults. The analysis in this Issue Brief shows that such impact of 401(k) leakages on job change. For example, previous EBRI research has simulated the extent to which both match in their retirement plans for paying down a student loan, see VanDerhei (January 2022). p Er ligib ovide ilitd y tfor ha tp y aou rticd ipa o tso ve ion in rba a td im efin and ed w cont ith p ribut ropion er c(it DaC tion. ) plaA n ca ny n ha use b ve ey a ond sig nif the ic sc ant op im e p of ac the t on for re ed guc oing ing rtehe quir se esa s E vings BRI’s Brief, no. 318 (Employee Benefit Research Institute, June 2008). an approach can measurably improve retirement outcomes for those individuals simulated to have at least one loan partial and total auto portability would improve retirement income adequacy. • Social Security. The present value of the combined 401(k) and IRA rollover account balances at age 65, assuming that the 2 shortfalls. Previous EBRI research provides information on the average individual retirement income deficits by the p 4 rior express permission. For permissions, please contact EBRI at permissions@ebri.org. default in the baseline scenario. VanDerhei (February 2020). A T A G L A N C E automatically enrolled loan protection program was used, were then compared with the baseline scenario for any VanDerhei, Jack, and Craig Copeland, “Can America Afford Tomorrow's Retirees: Results From the EBRI-ERF Retirement Another approach to reducing the simulated retirement deficits is to add some type of automatically enrolled 401(k) number of future years eligible for coverage in a defined contribution retirement plan. To further quantify the impact of • Defined contribution (DC) balances. 401(k) participants simulated to have had at least one loan default in the baseline scenario. R 5 eport Availability: This report is available on the internet at www.ebri.org Security Projection Model,” EBRI Issue Brief, no. 263 (Employee Benefit Research Institute, November 2003). loa p a Vra n tnD icins ipa erhe ur tion o ai nc (2022) en r tha e.tt ir p erm ev ee nt nt in s d com efae ult as d. eW qua hilc ey , ov the era d ll, U efic.S. it vD alue epa r for tm e th nt ose of in t Labhe or y doung ata in ed st ic c aohor te tha t (ta loa ges 35 n am –ount 39) a s t sseum nd etd o A key contributor to the existing U.S. retirement deficit is leakage from 401(k) plans upon job change. While overall, 7 be a ne g • ligib le por Indivi tion d of uatl r ota el p tire la m n ea nt ss a ec ts, coun EB t RI (IRA re) se baarla ch ha nces. s sh own that defaulting on retirement plan loans can t U. R o e S. ha fe D ve e r p e no anc rtfut me eur s nt e of yeL aa rb s of or d ea ligib ta indic ility a (a te s if t thahe t loa y w n a ere m ount neves t r si em nd ula to teb de ta o n be eg e ligib mploy le p eor d tin ion o thef tot futur al p e b layn a an o sse rg ts, EB anizaRI tio n The average present-value increase in plan balance derived from the automatically enrolled loan protection program as 6 VanDerhei (August 2019). ® Table of Contents p tha rod t uc prov e si ide gnif s a icca cnt ess r etd o uc tho tion se s in r plans e) tir is e m $7 e8,04 nt ba 6 p lanc ere indiv s. Usi idua ng E l. BTha RI’s RSP t shorM, tfall d we e csi re m aula sest e su d b the sta nt imia pll ay c tt o on $4 re 4,5 tire 46 m e for nt research has shown that defaulting on retirement plan loans can produce significant reductions in retirement balances. Deloitte, “Loan leakage: How can we keep loan defaults from draining $2 trillion from America’s 401(k) accounts?,” a function of the current age of the 401(k) participant is shown below. balances a • s a mult Diple efin e of d p ba ey ne afit t a (g DeB 65 ) a nnu for sc itie es a narnd/or ios w h lum erep e -su mp m loy dis ee trs t ibut akie ons. ful l advantage of the Coronavirus Aid, One those ap wpitrh o oacne h to r to nin educ e ing year su s c of h le fut aur kaeg e e ligib is to ilia tyd d a nd som ev ee tn yp fur e tof hea rut to om $2 a7,83 tically 0 for enr tolle hose d 40 wit 1( h 10 k) loa –19 n insu yearrs of ancefut tha urte 7 2018. Introduction .......................................................................................................................................................... 3 In plan year 2019 (latest data available), only 1.2 percent of the $6.2 trillion in 401(k) plan assets were participant loans. Re eligib lief, a ilitynd . HE ouseho conomi lds c Se in ctur his it ya ( gC eA cRE ohor S) tA for ct t flexib unate ili teynoug to ah cc teo ss ha the veir a d t e le fin ast e d20 cont yea ribut rs of iofut n pur lae n. eW ligib e found ility in ptot hose entially prevents defaults. See Table D6 in U.S. Department of Labor, Employee Benefits Security Administration 2021. Figure 1 Background ........................................................................................................................................................... 4 significant • reductio Ne ns t hous in reing tirem eq euit nt yb .a lances as a multiple of pay at age 65 when employees take full CARES Act Fe prog llow rae m s, Ma s hav tte, tahe nd irK aavte yr a W gill e esh mor in, “ tfaThe ll at Re rettir ire em me ent nt rBerd euc ace h in d to Donly efine $1 d C 4,63 ont8. I ribut n o ion P thela r ns wor ,”d H s, w ello Wa orker lle s a t, gJa es 35 nuar–y39 20 w 13 ith . Impact of Automatic Enrollment Into Loan Protection Program ® ® 8 In this study we used the accumulation module of the Retirement Security Projection Model (RSPM) to simulate the d E no is B Van RI tfut ribut ’De s Re urrh e ions t e eir i (J ligib e a m u nd ly e ilint 2020). tfa y Se il t in a co ur p D it a C yy p P tlhe ra oje n ha mc tbion M v ae c ka. d The od efic elm it ................................ ost mor cea tta ha stn fiv rophic e t im sce ena s highe ................................ rio mrod tha ele n th d wose as o w ne ith a ................................ in w t le hic ast h w 20 or y ke ea rr s a s of re fut p .......... rov ure ide d 4 for 401(k) Participants Simulated to Have at Least One Loan A household is considered to run short of money in this model if aggregate resources in retirement are not Holden, Sarah, Jack VanDerhei, and Steven Bass, “401(k) Plan Asset Allocation, Account Balances, and Loan Activity in increase in the present value of the 401(k) account balances with and without the automatically enrolled loan CARES-Act-like access to withdrawals time and again as various crises occur. In other words, this is a scenario in which eligibility. Results ................................................................................................................................................................. 6 Default in the Baseline Scenario 9 sufficient to meet average retirement expenditures, defined as a combination of deterministic expenses from the prote 20 ct18 ion p ,” E rB og RI ra Im ss . ue W e B r us iee f,d no. the52 se 6, a resu nd lts t ICo I si Re mse ula artc eh P the e ra sp gg er ce tiv ga et, ev dol. pr27 esent , no. va2 (Ma lue ofr cth he 20 im 21 p) r.ov ement in plan Plan-specific information on loan provisions is available for the majority of the plans in the sample (including virtually all of policymakers essentially turn defined contribution plans into de facto emergency savings vehicles. In this scenario, the ® ConcC lu onsu sionm ................................ er Expenditure Surve................................ y (as a function of incom ................................ e) and some health insu ................................ rance and out-of- ............................ pocket, health- 7 8 balance for all current 401(k) participants assumed to have at least one loan default in the baseline scenario. Basing the sA ma bout ll plans t )he . So me Re pt la ir ns e w m ithou ent t this Se info cur rma ity tion Pr ao rej e cla ct ssion M ified as ha ode vingl a loan provision if any participant in the plan has overall median reduction in retirement balances as a multiple of pay at age 65 is 54 percent. Average Present-Value Improvement for Those Lu, Timothy (Jun), Olivia S. Mitchell, Stephen P. Utkus, and Jean A. Young, “Borrowing from the Future: 401(k) Plan related expenses, plus stochastic expenses from nursing-home and home-health care (at least until the point such our an o a uts nata lynd sis on ing loaass n um bala pnc tions e. Th from is ma Lu e y un t d ae l., rsta the te rthe esu nu lting mbinc er o re f a pse lans in otff he ering pre sent loans v (aolue r p aorticip f bala ants nce e s is ligib $1 le .96 t for loa rillns ion, ) References ................................ Current................................ Age With at Lea................................ st One Loan Defaul................................ t in the Baseline ............................ 7 9 Loans and Loan Defaults,” April 2015, PRC WP2015-06 Pension Research Council Working Paper. Available at EBRI launched a major project to provide this type of measurement in the late 1990s for several states expenses are covered by Medicaid). This version of the model is constructed to simulate retirement income b In th ecaus e e E B sRI ome /IC pIla 40 ns1( ma k)y d ha ata ve b a ose, ffe re 88 d a p e prlc ae n nt loa of n,p b aut rtic no ipa pn atrticip s wearnt e in p hadl a ta ns ke offe n out ring a loa loa n. n s It . is H li ow kee lyv tha er, tonly this 19 omis pe sion rce nt is of representing up to 40 years of loan default experience. Scenario Endnotes .............................................................................................................................................................. 9 https://pensionresearchcouncil.wharton.upenn.edu/wp 10 -content/uploads/2015/08/WP2015-06-Lu-et-al..pdf. concerned whether their residents would have sufficient income when they reached retirement age. A national those adeeligib quale cy , for as lo not ans e dha ad b ov 401 e. (A klt ) e prla na n loa tive ns ve rout sions of standing the. m L ooa den a l allow ctivit si ym vila arie r a s w nait lyh a sis for ge, tre enur plae ce , m and enta rca ctount es, st baanda lanc rd e. - small, as U.S. Government Accountability Office 1997 found that more than 95 percent of 401(k) plans that offer loans had at ® 25–34 $ 150,623 model — the EBRI Retirement Security Projection Model (RSPM) — was developed in 2003 (VanDerhei and least of o- ne liv ing plan cp aa lcrticip ulatio ant ns , wa ith nd aot n o he uts r a tadnd hoc ing tlo hr ae nsh . olds. Of those participants in plans offering loans, the highest percentages of participants with outstanding loan balances U.S. Department of Labor, Employee Benefits Security Administration. 2021. Private Pension Plan Bulletin, Abstract of Copeland 2003). New ve35–44 rsions of the m $od 18 e4 l ha ,68 v1 e been generated periodically to include updates for financial and were among participants in their thirties, forties, or fifties. Factoring in all 401(k) participants with and without loan 10 Figur 201e 9s For m 5500 Annual Reports (Version 1.0). Washington, DC: U.S. Department of Labor, Employee Benefits HoThe lden,b a Vseline anDerhe vei,r si aon nd Ba of sts he (2021) mode . l used for this analysis assumes all workers retire at age 65; that they immediately real estate market performance, employee demographics, and real-world behavior of 401(k) participants (based access in the database, 17 pe 45–54 rcent had loa $ ns 1 out 94,st 52 anding 9 at year-end 2018. Among participants with outstanding Security Administration (September). Available at begin drawing benefits from Social Security and defined benefit plans (if any); and, to the extent that the sum of on a database of 27 million 401(k) participants) and individual retirement account (IRA) accountholders (based 401(k) loans at the end of 2018, the average unpaid balance was $8,162, compared with $7,935 in the year-end 2017 Fi 11gure 1, Impact of Automatic Enrollment Into Loan Protection Program for 401(k) Participants Simulated to Have at 55–64 $ 195,692 Holden, VanDerhei, and Bass (2021). www.dol.gov/sites/dolgov/files/EBSA/researchers/statistics/retirement-bulletins/private-pension-plan-bulletins- their expenses and uninsured medical expenses exceed the projected, after-tax annual income from those sources, on a database of 20 million unique individuals). database. The median loan balance outstanding was $4,486 at year-end 2018, compared with $4,293 in the year-end Least One Loan Default in the Baseline Scenario ........................................................................................ 5 Source: Employee Benefit Research Institute Retirement Security abstract-2019.pdf. immediately begin to withdraw money from their individual accounts (defined contribution and cash balance plans 12 ® 2017 database. On average, over the past 23 years, among participants with loans outstanding, about 13 percent of Deloitte (2018). Withdrawals are assumed to revert to usual patterns assumed by EBRI in subsequent job changes. Projection Model version 3737. Howa es w ver, ell a mas ny IRA Am s)e. rI ic f th an e w re or is ke sruff s dic o ie not nt m ha one ve y a ctc o ep ss a yt o expe emp ns loy es w er-sponsor ithout ta ep dp d ing efin int ed o c the ont tra ibut x-qion p ualifie lad ns indiv — eidua spec l ially the remaining account balance remained unpaid. VanDerhei, Jack, "Impact of Various Legislative Proposals and Industry Innovations on Retirement Income Adequacy,” accounts, those balances are assumed to be invested in a non-tax-advantaged account where the investment those who are employed by small businesses that cannot afford the cost of offering such plans, are ill-equipped to The average present value increases with age in this analysis due to the fact that all the loan default events for those EBRI Issue Brief, no. 550 (Employee Benefit Research Institute, January 20, 2022). Thi mana s r inc g ee p om or the te si is am dtula m axe ini td est s t a rs or ahe tion o p dot ina f a ernt y ia p inc la l im n, om p ee a t. c c. tI ndivi Se of vaed d rd a ua ing l ll a ega cis c n la ount atu ivte om s a alt a re e ti rctna a ra lly tciv k e e enr d s ha olle unt vil t d e loa b he ee n p p n e oint rn ot a e c ac tte t ion p w d hic to h th r dog eare l w aym a it r h th te o d 40 e isp 1( so le kt) -e cd p a. la lle A ns d t currently in the oldest cohorts will by definition involve account balances for those in the older cohorts. In contrast, for 3 4 ® that point, any net housing equity is assumed to be added to retirement savings in the form of a lump-sum a cov nd esh rag ow e s t gaha p. t P itr e m ve ious asu rEaB bRI ly im resea prov rcehs r us ete ird e m RSP entM out to cosi m m eula s for te tthose he likindiv ely im idua pac ls t si on mrula etitre ed m teo ntha inc veom ate le aadst e qone uac y loa of n VanDerhei, Jack, “CARES Act: Implications for Retirement Security of American Workers,” EBRI Issue Brief, no. 509 those currently in the younger cohorts, the account balances impacted by a loan event can be anywhere from the t dhr efa ee d ult is of tin t rt ibut he he ion (no Se bta tseline ing tE av e sc re ry e v e na Crom se rio. m a nuni nuittyy Up mor for tg a Re get ir (e RA mM)) ent . EInha f all t nche em re ent tir e Am cte o nt f 201 savings a 9’s (SE re C UR exha E A us ctte ’s) d m and ostt he im p Soc ortia ant l (Employee Benefit Research Institute, July 30, 2020). current age to age 64. Since the average account balances increase monotonically with age, this would lead one to Security and defined benefit payments are not sufficient to pay expenses, the individual is designated as having run provisions: expect that the present value would be higher for the older cohort. VanD sh er or he t i, of Ja m cone k, “y Im ap t a tha ct t of pt oint he .C OVID-19 Pandemic on Retirement Income Adequacy: Evidence From EBRI’s ® • Widening access to multiple employ ® er plans (MEPs) through open MEPs. EBRI’s Retirement Security Projection Model Retirement Security Projection Model, ” EBRI Issue Brief, no. 505 (Employee Benefit Research Institute, April 21, Offsetting this to some extent is the fact that those in the younger cohorts would have a higher probability of multiple ® • Increasing the cap under which plan sponsors can automatically enroll workers in “safe harbor” retirement I n this study w ® e used the accumulation module of RSPM to simulate the increase in the present value of the 401(k) 2020). EBRI’s RSPM simulates retirement income adequacy for all U.S. households between the ages of 35 and 64. The model loan default events than those currently in the older cohorts, since they have more years of exposure to a potential plans, from 10 percent of wages to 15 percent. account balances with and without the automatically enrolled loan protection program. We first ran a baseline scenario loa reflect n de s t fahe ult .r eal-world behavior of 27 million 401(k) participants as well as 20 million individuals with individual VanD •e rhe Ci, ov Ja ercing k, “long How- tMuc ermh M paror t-e tim Se ec e ur m ep D loy oe es t es.he SECURE Act Make American Workers: Evidence From EBRI’s assuming there was no such program in effect and flagged each year — if any — that a 401(k) participant was retirement accounts (IRAs). ® ® Retirement Security Projection Model, ” EBRI Issue Brief, no. 501 (Employee Benefit Research Institute, February assumed to have a loan default. The assumptions were similar to those used in previous RSPM publications; however, We used these results to simulate the aggregated present value of the improvement in plan balance for all current Taking 20, a20 ll t20 hr) e.e of these provisions into account, the reduction in retirement savings deficits was simulated to be t 40 he 1( pke)r c pe ant rtic ag ipa esnt of s e ali ss gum iblee d 401 to (k ha ) v pe a ra tic t ipa least nt s w oneit h 401( loan de kf)a loa ult ns in t bhe y p b aarseline ticipant sc a eg na e,r io te.nur Using e, and those acca ount ssum sip ze tion ws, t ereh e $114.9 billion. EBRI Issue Brief is registered in the U.S. Patent and Trademark Office. ISSN: 0887 –137X/90 0887 –137X/90 $ .50+.50 updated to reflect the tabulations from EBRI/ICI Participant-Directed Retirement year-end 2018 Plan Data Collection resulting increase is $1.96 trillion, representing up to forty years of loan default experience. VanDerhei, Jack, “The Impact of Auto Portability on Preserving Retirement Savings Currently Lost to 401(k) Cashout 11 Project. In addition, the percentage of those with a loan terminating was assumed to be equivalent to the full period 5 © 2022, Employee Benefit Research Institute –Education and Research Fund. All rights reserved A mor Leea k re ac ge ent ,” E EB BRI RI I re ss pue or tB rsi ie m f, ula no. tes t 48he 9 ( E pm otp elo ntyia ee l im Be pne acfit t on Rersea etirrecm h I ent ns tinc itut om e, e A ugus adeqtu 15 acy , 20 of 19 fiv)e different proposals. It numbers of 11.2 percent in Table 4 of Lu et al. 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