The Pension Blueprint podcast video transcript 

Episode 2 Transcript

Celine Chiovitti · Roy Holder · Gavin Perera-Betts 

Working draft for review. Dialogue is preserved from the supplied SRT. Speaker assignments are inferred from context and have not been checked against this recording. Opening and closing guest responses remain unconfirmed. Chapter times are provisional SRT positions; the audio offset has not been verified. 

0:00 Introduction 

Celine: Welcome to the Pension Blueprint. I'm Celine Chiovitti, Chief Pension Officer at OMERS, and your host. As our lives and expectations continue to change, pension plans need to evolve too. So what can we learn from organizations around the world that are finding new ways to connect with members and prepare them for retirement? Today, I'm joined by two pension leaders from opposite sides of the Atlantic, Roy Holder, Director of Client Services at the New York City Employees Retirement System, and Gavin Perera-Betts, Chief Customer Officer and Managing Director of Nest. Together, we'll explore how some of the world's leading pension organizations are evolving to better serve today's members while also preparing for the retirement needs of tomorrow. 

Celine: So, let's get into it. 

Celine: Hello, Roy and Gavin. Welcome to the Pension Blueprint. 

Guest unconfirmed: Thank you, Celine. Great to be here. Likewise, yeah, thanks very much. We're looking forward to it. 

Celine: So excited to have this conversation. One of the most interesting things that I get to do is connect with people across the globe and talk about the pension plans that they're leading and your members. And so today, we've got New York City and London represented along, of course, with Canada. So really, really excited to have this conversation. 

1:29 Pension Plans Across the Atlantic 

Celine: I would love to start by just having each of you tell us a little bit about your plan, about your membership, about what you do. And maybe, Gavin, I will start with you over in London. 

Gavin: Of course, yeah. So I'm Gavin Perera-Betts. I'm Chief Customer Officer at Nest Pensions. I've got accountability of everything our customers experience with Nest, basically, from the brand to our proposition to our service experience. And I think I've been, I'd say, been really fortunate to be involved with Nest since it started. So as part of the original team that set Nest Pensions up and sort of give a bit of context about what Nest is. 

Gavin: In the early 2000s, there was a pensions commission here in the UK, which looked at their long-term savings and found probably about 12 million people weren't saving enough for retirement and the state solution wouldn't be enough. And so brought in a thing called auto-enrollment. And auto-enrollment was based around some behavioural science theory from Richard Thaler around putting people into a pension scheme and then give them the chance to opt out rather than the traditional, you know, then making the choice to join. 

Gavin: And as part of that legislation, Nest was created. And we were created to make sure everyone had somewhere to save. So we have an obligation to accept every single employer who wants to use us, no matter how big, no matter how small. It's been an incredible success. As someone who saw the first pound come in to sit here now and we've got 14 million members. So one in three of the UK have got some form of savings with Nest. We have about half a million employers who pay us over 600 million pounds a month in contributions and have assets around 68 billion at the moment. 

Gavin: And that's projected to rise to 100 billion by the end of this decade. So it's been an incredible journey to watch us go from nothing to that. 

Celine: Phenomenal. That's phenomenal. Roy, how about you? 

Roy: Celine, so I work for New York City Employees Retirement System, most fondly known as NYCERS. We were founded in 1920. So as of last April, we're 106 years old. So that makes us pretty special. 

Celine: That's incredible. 

Roy: Absolutely. We serve approximately 445,000 members, pensioners and beneficiaries. And we are about 82 percent funded. And that's an important stat because if you understand U.S. pensions, 82 percent means we are as healthy as we can be at this moment with about 62 billion dollars in assets and growing. 

Roy: An interesting thing about NYCERS is we offer loans to our membership, which is a pretty unique benefit for those not having to wait until the time retirement has come. The job of a pension system is to inspire trust and to support the individuals through that journey. And so someone being able to take out a loan to pay for college tuition or a family emergency, you know, once a year, I think, is an absolute great benefit and highly used. We serve about four hundred and forty-six million dollars, we provide in loans every year. 

Celine: I think it's so interesting. I come back and talk to you a bit more about that and some of the innovative programs that you are doing over there at NYCERS. 

4:56 Engaging Members and Building Trust 

Celine: I want to really, really just double down on something that you both said, which is, you know, at the end of the day, what you're here to do is provide retirement security to so many individuals. And I think that, you know, as the population is getting older and we're all kind of dealing with that and, you know, the reality of low savings out there, it's just such an important thing to do. And so I think we're all kind of working for these purpose-driven organizations. And Gavin, you started talking about sort of auto-enrollment. And before that, there weren't that many people contributing to pension plans. 

Celine: And so I think really finding a way to sort of get people to just automatically start saving. 

Celine: So, Gavin, maybe you can tell us some of the ways that you communicate and engage with your members and maybe let us know if that's changed from when you first started, because you've been with Nest from day one to where it is today. 

Gavin: Yeah, absolutely. I mean, and day one of I should put into context for us is only what, 17 years ago. So not quite Roy's length of scheme, we’re young, quite a young scheme. And I think the thing with auto-enrollment is the intention originally was people would be enrolled to it, enrolled, and then they could opt out. And their expectation of probably one in three opting out. But actually what's happened is we at Nest see around 10 percent of members opt out. That's an awful lot of people that stay in that savings journey. 

Gavin: So two things. One, if you don't engage your members, other people will. And we've got a duty to look after our members and make sure they understand what's the best decisions for them. And if we should, we should engage with them. And secondly, the thought that inertia can last for 30 years and someone finished with a suitable income in retirement, probably not going to last. You need to help people understand what they're saving in and understand when the time is right to make decisions. 

Gavin: So we certainly the last couple of years started to move into a strategy of really personalizing the experience that our members have. So when they do choose to engage, we want to be in a place where we're talking to them as an individual rather than one of 14 million. We are massive. We're the biggest pension scheme in the UK. Yet we're a bit of a secret. So we want people to understand the scheme that they're in and start to start to understand the scheme they're saving with. So that's been a real big change for us to go out and actually raise the profile of the scheme, help members understand the provider that they're saving with. 

Celine: First of all, the fact that 90 percent of your members are staying is incredible. So congratulations on that. And I think just important to put in context, of course, Nest is a defined contribution plan. And it's, you know, once you're in, you do have the option of, as you said, you know, opting out at some point in time. And so really important to keep them communicating and engaged in the process and then also educated to your point about what the future payment may be, given the fact that it's a defined contribution plan. 

Celine: Now, that, of course, is a little bit different than the plans that Roy and I are with, which are defined benefit plans. And they don't necessarily have to make the same decisions, but it's still so important to be able to engage and communicate with them and have them understand, you know, to your point, the important decisions that are required through that that pension journey. Roy, maybe you can talk a little bit about some of the ways that you have sort of seen changes and how you're engaging and communicating with your members. 

Roy: Absolutely. As you mentioned, Celine, correctly, so we are a defined benefit plan. And so our members, a large percentage of them are opted into the plan once they have come off a civil service list or is employed by the city. And as director of client services, I oversee the team responsible for helping members and retirees sort of navigate this entire journey, which involves educating them on the benefits. They are a group of individuals who are not what we call forced in and they have an option to join or not to join. 

Roy: And so one of the teams I oversee is a pension education team that go out and speak to large groups of members, new employees, orient them to the benefits of joining. And we have a particular seminar called 10 reasons to join NYCERS and it outlines all of the benefits of having a defined benefit plan support you through this journey on to retirement. 

Roy: We have one-on-one counselling education that we do to ensure that members are kept abreast of the benefits that are offered. I think it is incredibly important that members understand, you know, even though they don't have an option to go somewhere else, it is still important for us to tell them about the benefits of being right here with NYCERS and what it means to be able to, at the end of this career journey, sit back and say, I've earned this and NYCERS is paying me a benefit that's going to last me for the rest of my life and beyond if I leave a continued benefit for a member of my family. 

Roy: Education is not any less important given the fact that you don't have a choice. I still think it's worth a conversation. 

Celine: Do you think it's one of the reasons people sort of join their employer and stay with their employer? Do you think the pension makes a difference there? 

Roy: Absolutely. I could speak personally. You know, I began my journey with the city long time ago, 1994, I believe, and I left to go private because I thought, wow, you know, I can go make more money. It's got to be a great thing. And then I realized I can't really save enough in a 401k to give me the benefits that a defined benefit plan like NYCERS can. And so I circled back to the city and it is it is the draw. It is the thing that my team tells folks. It says, you know, imagine getting, you know, anywhere from an average of forty five thousand dollars to upwards of a six figure pension for the rest of your life. 

Roy: It's not regardless of what the stock market does, it's yours and it's it's there for you when you need it most. And I think, you know, pension systems about trust and security and that's one big way that we can assure that. 

Celine: Yeah. And it's it's so hard when we look at the generational changes that are sort of happening around us. It's also long term. And so needing people to sort of make decisions not for the short term, but to really pay attention to the long term. 

11:38 Generational Change and Digital Services 

Celine: What are you finding, Gavin, as far as like, do you see? And I know you've been there for 17 years and so still there, a very, very young plan. But you were there to fill a need and so fill this gap. Are you seeing do you see any generational differences as far as the people who stay versus go or do you see any changes in and how different generations want to receive information? 

Gavin: I think that certainly post-auto enrollment, the conversation that pension is far more than it used to be. And I think that we're seeing now the last maybe four to five years. But your point around the choice employer DB. Employers are caring more about the type of scheme they're in as well from being more of a compliance only thought into actually what the features you're offering to my staff. And so certainly seeing that that's evolved all the way down to the smallest of micro employers actually really starting to think more about the features they're offering to their staff. 

Gavin: So it's definitely I think a shift. I mean, for us, we skew quite young as a scheme. We are a young scheme, but also our membership is quite young compared to maybe traditional UK pension providers. And we skew certainly to more moderate earners in the UK, who we've sort of set up to help make sure they had a place to save. 

Gavin: What we've found with 14 million customers is digital is key for us. That you're trying to find ways of reaching people digitally is really the way in which you can try and engage with a membership as large as ours is. I mean, the UK, over 95% of people have got a smartphone. And so the sort of evolution of our app is really important. That is a really key way, I think, of being able to communicate with people. We sort of talk about how you're stressed, you have a Nest in your pocket. 

Celine: And what are people using the app for? 

Gavin: Yeah, so at the moment, it's more of an inquiry function. It's sort of how much have I got saved and are all my dues up to date, etc. 

Gavin: The vision we have in terms of the roadmap for that will be much more a case of nudging people when things happen to them and making sure, again, I think the UK, so with DC, pension can get a bit of a bad reputation associated with money coming out of my pay packet, as opposed to actually your employer's contributing money into your pension, the government are contributing money into your pension. So how can we find a way through the app to actually tell people that maybe give them notifications when they receive money from their employer, trying to sort of build that positive connection. 

Gavin: As Roy said, I think trust is key for us. We are a not-for-profit scheme and our members understand that everything we are doing is planning back into trying to deliver them a better outcome in later life. It's a really key component of building that trust. 

Celine: Yeah, my theory is, especially when we look at our younger members, our youngest member today is 14 years old, which is crazy. So very young, but if you sort of think of sort of that younger sort of Gen Z millennial type group, I do think that they are paying attention to money more. And so pensions still feel so far away but if you turn it into like not the deduction, but it's actually, it is saving, you're doing something for your future. And so how do we sort of change that conversation? 

Celine: Roy, I know you have also been leaning into digital, to digital first. Do you want to talk a little bit about your journey? 

Roy: Absolutely. So we, like Nest, we have an app as well, and we have an online presence that we've held for the last 10 plus years. 

Roy: We, for us, it's digital first, but not digital only, because we do have a segment of our population that I don't believe will ever opt in for what we consider to be the digital journey. But our app offers all of the things that you can do in person, because we do have a walk-in center where 445,000 not quite for 14 million as Nest but we do offer our members the opportunity to walk in and deal with us in person. 

Roy: But on the app, everything that you can do in person, you're able to do, you can retire, you can enroll, you can take all of the in between journeys on the app. And about 50% of our folks are actually engaging with us digitally and not by paper. And so that is a big push for us right now. 

Celine: I agree. I think digital is probably the best way to engage broadly with a membership and especially with sort of the younger members in an efficient way. But we all also deal with some older members and some individuals that typically can't necessarily use it in the same way. And so I think having optionality is really important. 

16:13 Supporting Members Through Pension Loans 

Celine: Okay, Roy, you started to talk a little bit about your loan program. I'd love to dive into that a little bit more because I do think obviously we don't do that. At OMERS, we don't we don't we're not legislated to do it in that way in Canada. But I do think the idea of finding different ways to find value for individuals as they're going through the life journey. And so talk a little bit about that program, how it was born and and how people are leveraging it. 

Roy: Absolutely. It's been part of our makeup for several tiers. I mean, we've got we're at tier six now and I believe it started. I don't want to misquote, but I believe it started around tier three. And so our membership are able to borrow up to 75% of their accumulated account balances. 

Roy: And so that is an option that is regulated by IRS rules. And they can do it every 12 months, as long as there's something available, they can borrow it. And what we end up having our individuals who have paid for, as I mentioned, there's young people's college education. 

Roy: You know, it's it's easy enough to come to NYCERS and take out the loan and pay it back through the 12 months, ensuring that a young person graduates from school without college loan debt. It is one of the most used benefit. For a long time, it's been our number one transaction and the number one reason why individuals come in. 

Roy: So obviously, it was one of the first things that we wanted to put on our online portal for members is the ability to see how much you have available to you to borrow against and the ability to actually borrow that funds and be have it directly deposited into your account. 

Celine: Yeah, well, I think it definitely makes sense in your situation. And I think you can sort of see the stickiness that goes around it. And so getting people to engage in a different way and to do these loans with a trusted source is very innovative. 

18:18 Longevity and the Future of Retirement 

Celine: We are living a lot longer. And so, you know, we're in this longevity economy. I know when OMERS started out in the 1960s, people were only ever expected to live at that point in time until, you know, maybe their mid 60s, early 70s today at OMERS, our oldest member is one hundred and six years old. And so we're really starting to see longevity in the retirement space. Do you think that retirement will look different for the future generations? I'm thinking of young members just starting today. Do you think retirement will look different for them than previous generations? 

Celine: And Gavin, maybe I'll ask you first. 

Gavin: Yeah, I mean, I think it already is. I think the concept of getting to a certain age, stopping work, taking retirement income is getting less and less for people. And actually what you'll see is people remaining in work, drawing down some income. So basically saving and taking up at the same time. I think that is where the generation that currently now in the sub 40, that is what's going to be happening. I think that concept of getting to 65 as it was, which is getting added on by year every year here, you know, and stopping work is not really happening. 

Gavin: And so I think you have to design retirement solutions that will understand that flexibility. 

Celine: Roy, how about you? 

Roy: So I think defined benefit plans by design, offer a unique opportunity that meets this generation in that you can vest. It means you can work for five years, join a pension for five years, and then you can go do something else. And when you are of age, you will receive a benefit from the system. 

Roy: I don't know if pensions in of themselves are going to be the only source of retirement income for this generation. I think they want to invest, they want to be entrepreneurs, but it does defined benefit does offer them an opportunity to give up a certain number of years towards investing in the pension and then leave. And go do something else, which is something I realize the generation that we are looking at right now, they love to explore. 

Roy: So this this system does offer them that opportunity to vest and go do something else. And maybe they circle back like I did several years later and retire from the system or, you know, they wait until they're of age and collect that benefit. They're entitled to, but it's a is going to be a combination of that benefit plus the other things that they need to do, including in some cases, working a gig job to make additional income. So it changes what I think the defined benefit plan supports where this generation is headed. 

Celine: I agree with you. Like, I think at the end of the day, the reality is the workforce and the work patterns have changed. The job is the jobs are different than they were. But I also believe that, you know, people are thinking about living and working in a different way than they have in the past. And so a bit more fluid. And so I agree. I think pensions play such a big role in your future savings, but it might not be the only the only thing. 

21:35 Financial Wellbeing Beyond the Pension 

Celine: And with that in mind, I wanted to ask you what you think the role of pension plans like OMERS, like NYCERS is like Nest is in helping people financially plan. Do you think there is a role in, you know, pension plans that are stepping in and helping people think more broadly about their their savings and their future? Gavin, I'll start with you. 

Gavin: Yeah, so we definitely do. I think particularly if you think about our history set up, I guess, for to try and help make sure there wasn't supply side failure for a type of member, a type of type of work in the UK, perhaps wasn't traditionally served by the existing market. And I think that's true across all of their financial situations. 

Gavin: And I think we are definitely focusing quite hard on how do we help people in the broadest sense. You know, we have a we have a purpose, which is financial building financial peace of mind for all. And that is quite intentionally not just about pension. It's about how do you help people think about their total financial resilience and and well-being. And I think if you can build that trust, which Roy talks about is absolutely key, then you can start to earn the right to have the conversation with people about their broader financial health. 

Gavin: And I think that part of that is two benefits. One is the here and now, it just helps people understand potentially how to how to sort of shape their current financial position. But it also brings home the importance of long-term savings. If you can help people in the short term, then they are more likely to retain their savings in the long term rather than thinking, yeah, I can't save that thing in the future. I'm going to stop because I need the money now. 

Celine: Yeah, I think you're right. We're the trusted source. And so, Roy, how about you? 

Roy: So we we don't directly provide financial advice, but what we do is as part of our education program, we invite other DC plans on we we invite Social Security Administration to come and join us as part of that conversation, because we can speak explicitly and accurately about what we offer. 

Roy: We try not to delve into things that are not things we administer, but we do bring those experts to the table to offer our membership an opportunity to hear from all sides in a way it offers them that holistic view of what retirement life could be like. 

Roy: There is an appetite, though, for us to be more of a financial planning institution. And so who knows what the future may hold. 

24:13 Small Steps for Long Term Savings 

Celine: Final question for each of you. If you had one piece of advice or one thing you would like your members to think about with respect to actioning their pension with you, what would that be at this time? I'm going to change it up and I'm going to start with you, Roy. 

Roy: So one thing, there are a few things, but the one thing I think that is incredibly important for our membership is to check in with your local pension system. Some individuals start the job and someone gave them an application or they went online. They signed up and then they forgot about us for 20 years and then they show up expecting that their paychecks will continue exactly as it is. Then they realize, oh, no, I'm only getting a percentage of that. 

Roy: And so I would say it is a benefit. We're not your employer. We are a benefit that is offered by your employment, but you need to check in on that benefit. Make sure you understand it completely. 

Celine: Yeah, pay attention. Gavin, how about you? 

Gavin: Yeah, I mean, it's Roy's stolen my idea, so I think that's something else. But I think it's right. I think we have members who've enrolled and then we don't hear from a number of years and that makes it difficult to keep that engagement going. 

Gavin: So I think that is a really key point. The other thing I would say is really value the long term nature of what you're doing. 

Gavin: Like starting young with small amounts is key. And I think people take- this generation is changing, but certainly I think people have taken too long to realize that those small things that start early when you're young have a massive implication longer. So it's certainly what I talk to my children about because I was far too late when I first started saving - I've been in this industry for 30 years. And I think people recognizing that is why auto-enrolment is brilliant - people in their first job being enrolled into a pension saving and starting small. And learning that savings journey, I think is really key. 

Gavin: So I think it's really valuing the long-term nature of what you're getting involved into and really valuing those small steps make a massive difference in the end. 

Celine: Yeah, I think that's so true. I think it's building that good sort of financial habit early on in life. And in your 20s and 30s, it doesn't even really matter how much it is as long as you're doing it consistently. And that's the nature of these plans. These plans are just sort of automatic, let it go, continue to contribute, pay attention to your pension. 

Celine: I always find it so interesting. People, I think, pay more attention to like how much vision care coverage do I have this year? Or, you know, paramedical services. Meanwhile, your pension is typically one of your largest assets. 

Celine: Ask the questions, look at your statements, engage through the app, and continue to pay attention. Thank you so much. It's been so delightful to have this conversation with you. And please come and visit us. When you are in Toronto, come and visit us at OMERS. We would love to see you. And it's always great to talk to other pension plans. Thank you. 

Guest unconfirmed: That's been great. Thank you so much. Absolutely. Thank you. Thank you.