Loan defaults prevented by automatic enrollment in loan protection (protection which would be triggered default following termination from employment) decreases EBRI’s retirement security deficit by $1.96 trillion, or by 53%. This identifies loan defaults following termination of employment as being a key source of “leakage,” as well as an important element of  the nation’s “retirement savings deficit.” The massive size of this systemic retirement security loss from loan defaults has largely gone unnoticed in the past by policymakers, plan sponsors and plan advisers.
Continue Reading 401(k) Loan Protection Helps Address Leakage. How it Works.