Reclaiming Retirement For All
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hello and welcome thank you so much for joining us for today's webinar reclaiming retirement for all my name is mika weinstein and i'm the director of operations at just futures the primary sponsor of this event my pronouns are she her and i'm located on piscataway and the koch tank land also known as washington dc uh you can go ahead and move to the next slide if you haven't already please go ahead and introduce yourself in the chat with your name pronouns uh your affiliated organization if you have one and an acknowledgement of the original caretakers of the land that you're on um we'd also love to hear of course why you joined this webinar today you can move to the next slide so we're going to cover a few house cut housekeeping items first uh if you experience any technical difficulties during this webinar you can use the number on the screen to contact zoom support directly you can provide them with the webinar id for this event which is listed and if uh for some reason you're having trouble getting in touch with them you can contact justine from our team uh for additional support right [Music] this webinar will be presented in english um there are closed captions available and you can turn oh i'm enabling them now there are as of right this moment uh closed captions available you can turn them on and off by clicking on the cdc live transcript icon at the bottom of your zoom window we are recording today's webinar and we will share the recording with all participants and anyone who you want to pass the recording along to if you want to submit a question during the webinar we will have a q a portion at the end of the presentation you should use the q a feature that is on that same zoom toolbar rather than the chat because we hope there will be lively conversation in the chat throughout this presentation we don't want to lose your question so to make sure that we have it and can share it with our presenter at the end of the presentation please make sure you do use that q a tool so before we get into the main content i want to share briefly about just features and why we produce this research and event our co-founders alex sang chin and steve choi have worked for decades in movement organizing the nonprofit space and philanthropy about a year ago they came together with the idea for just futures after hearing from their peers and experiencing themselves a lot of unmet needs around retirement and investing i'm sure it will come as no surprise that we'll hear about many of those unmet needs today but the the mission of just futures is to create a platform that connects non-profits and their workers with investments that are increasingly aligned with the needs of people communities in our one planet we are a people of color and gender diverse public benefit corporation but outside of our staff and our own work histories we do want movement governance so we're committed to 30 non-dilutable ownership by non-profit and social movement organizations that are working toward a just transition to a regenerative economy our first product offering will be a 401k retirement plan which we're planning to soft launch later this summer uh you know we know that the needs of our sector have never been a priority for the financial services industry so one of our driving forces is building a retirement product that is purpose-built for non-profits and other mission-driven organizations the option to invest your values is only one part of that you know it's a heavy emphasis for us but there's a lot more to it there's also cost ease of use transparency and a bunch of other factors that chitra is going to talk more about today but to make sure that we didn't rely on our own experiences and assumptions we commissioned the research that chitter will be presenting on and you know through this research we validated our own experiences and also as expected uh getting input from over 200 organizations really expanded our view not just of how we can create a better product but also how we as a sector can work on moving risk and responsibility off of individuals and up to the collective level we are really excited to share the details of those findings with you today so i want to give a huge shout out and thank you to the co-sponsors of this event neighborhood funders group who's our co-host today grant makers for effective organizations full spectrum capital partners jesse smith noyes foundation general services foundation the nathan cummings foundation and asset funders network um i think there will be some live tweeting of this event using the hashtag reclaimingretirement so if you're into twitter if that's your thing please do join in with that conversation and i'm now going to turn it over to chitra ir who's the primary researcher on this body of work chitra you can take it away great um it is wonderful to be here today i as mika mentioned i was commissioned by just futures to explore a topic that is really exciting to me which is pain points and challenges that nonprofits experience around retirement i come at this work having spent my entire career in the nonprofit sector most recently as an executive director of a small organization who was charged with figuring out retirement found it incredibly challenging and exhausting and so part of this process has been really validating to know that i wasn't alone and that we can do better in terms of what we're going to do today we'll talk just to set us up we'll talk a little bit about why retirement why that's an important focus when we're thinking about broader issues around economic justice in this country who participated in the survey i think some of you are here i can see from the chat but who in general we're talking about when we talk about the survey that we conducted our findings which are four gaps within the nonprofit sector around retirement and our recommendations uh in terms of how to move forward and as mika mentioned there will be a q a and we're hoping to have between 20 and 30 minutes for that q a so we're hoping for it to be substantial so i encourage you to put in all your questions in the q a box so we can have a really great discussion after we go through our findings and our recommendations but first why retirement and so as mika mentioned in terms of how just futures is thinking about this one really important thing to think about is the amount of savings um currently that are locked up in in other plans that could be redirected into social justice investment so there's a real potential here that doesn't currently exist in terms of what would it mean to really invest one's values but in addition really thinking about what's important within the nonprofit sector when we think about retirement right it's an opportunity for those who've spent their career right in the nonprofit spectrum not to fall into poverty when they leave their work i've had the personal experience and i'm sure many of you had of seeing many of our movement elders right who've really been at the forefront of so much social change later after they stepped down they are being funded by a gofundme because they need treatment healthcare where they need stable housing and it feels um just that there's a real lack of dignity and a lack of support i think for often people who have given their lives to the sector of not an ability to continue on so retirement feels really important so that people are able to maintain um some standard of living even after they've done their work as a way of honoring them as opposed to this hoping that people can come together i think the other thing that feels really important is that retirement particularly for people who don't come from generational wealth is that it offers one of the only pathways um towards wealth accumulation and wealthier meaning just you know over your daily expenses uh in general right the pathway to wealth accumulation in this country is about uh coming from wealth so we know that people who come from wealth are more most likely to continue uh their ability to get wealth or you marry into it or in terms of work that being an entrepreneur or an owner working at a really uh for a really high salary um that allows you to invest in things or working at places with stock options those are ways of accumulating wealth those are often not available to people in the nonprofit sector and so what we're left with is real estate which has lots of question marks around it particularly because of race differences but also what's happened to the real estate market and then retirement and so what's really important is we all know about the racial and generational wealth gaps is retirement offers one of the only ways to address that or mitigate that that is available to people particularly those who spend their careers in the nonprofit sector [Music] the other thing that we know um about retirement is that starting later becomes far more expensive and i think that we're all probably really familiar with these slides and i'm not a fan because i feel like they're often fear-mongering because mostly they offer reminders of you should have done this thing earlier in life you've messed up at the same time it's really important to see what a difference it makes if you start investing earlier so that a dollar that is invested in retirement savings at the age of 20 um goes up to 488 versus you know investing it later at age 40.
So when you start saving later it's a lot more expensive and this isn't to blame individuals but it does mean as a sector that when people are starting out it's a lot cheaper in some ways to set them up for success later similarly this is showing the same things just in a slightly different format is if we compare three people all of whom save 150 000 for retirement it makes a really big difference when they start doing that saving so starting at age 25 they both are not having to spend that much every year 3750 but we see how um compounded savings right makes a huge difference here the magic of compounded interest and so starting at age 35 you're spending more per year to get to that 150 000 but also you have far less in savings and so i say all of this to say we if we understand that retirement is one of the only pathways towards people who don't come from generational wealth to start to accumulate something to offset that wealth gap it also matters when you start and how much you put in makes a really big difference in addition in addition to when you start the other thing and we'll talk more about this in this report is fees make a really big difference in terms of what happens to your savings and so this chart again we'll be referencing this throughout is makes a really big difference of whether you have point five percent in fees what you see here is that you're you're losing an amount to fees that's that's a necessary part of what invest having a retirement account is but the difference between point five percent and two percent is a huge difference in terms of what you accumulate so it matters when you start it matters how much you put in but it also matters what your fees look like or your rate of return so again trying really hard not to fear monger but just to say it has a huge impact uh engaging in retirement and then the plan itself so let's talk about who participated in our survey it was really important to us to be representative the just futures team largely comes from new york dc and california so we are largely coastal elite and we know that the nonprofit sector in fact stretches across the country as a whole and so we were really committed to making sure that we had participation across the country what we see here is these um these uh little dots represent where organizations were headquartered but the level of blue indicates what uh states they cover so we while we didn't have organizations based in every state we did have them based in every region and we did have coverage of the entire country with with huge concentrations in new york and california which is not surprising we also focused on smaller organizations the vast majority of nonprofit organizations are small meaning they have less than 20 employees and budgets of a million or under so we focused on those organizations who have uh paid employees is where we focused on in addition um we did some oversampling we wanted to really prioritize social justice and movement aligned groups in doing this we were very determined not to police organizations to say are you really a movement aligned group we let people self-define and so over 80 percent of organizations identified as being social justice group in a slightly lower percentage identified as being movement aligned we found that the vast majority of organizations were systems change or organizing groups followed by direct services in addition we oversampled for leaders of color we know from a lot of the research that about 20 of non-profits are currently run by people of color we had about two-thirds of our participants were organizations run by leaders of color we did this so we could see the differences between organizations and we know we would need to oversample in order to do that and so these are two places where we oversampled in total we had 207 organizations where we were able to use their complete surveys we disposed of surveys that were not filled out completely or had contradictory information of those 207 organizations we had 143 who offered retirement and 64 who didn't we oversampled again in terms of who didn't offer retirement because we wanted to really make sure that we understood what was going on there so um after we did the survey we held a number of focus groups follow-up focus groups as well as interviews and based on the combination of the survey the focus groups and the interviews we have four um gaps that we're identifying within the nonprofit sector capacity transparency values and equity and we're going to walk through each of these now starting with the capacity gap i think one of these findings which isn't particularly surprising i think to anyone here is that you find that smaller organizations are far less likely to offer retirement plan the chart here is about budget size but you could also overlay a chart on employee size replace that under 500 000 with less than five employees and you would get a very similar chart um here it starts to go up this would be like less than 10 employees or between 500 000 and a million but what you see is really these organizations that are under a million a lot of them don't offer retirement and then it starts to increase and the organizations themselves would identify both the cost of retirement as well as a lack of administrative capacity is why they aren't providing a retirement plan this is very similar in many ways to the for-profit sector where small businesses struggle the most both in terms of cost and administrative capacity we really wanted to dig into what that means this lack of administrative capacity and what we found was the lack of administrative staff and one of the things for the survey is we asked that the person with operational authority for the retirement plan be the person to fill it out and if they didn't have a plan we said who would be have operational authority meaning who'd be responsible for making sure you're compliant who would be in charge of training and what we find is that for organizations who have a plan and that's indicated by those in blue it's most likely that the person with operational authority is not the executive director and meaning that they are a a cfo a coo a co-executive director an operations manager but it is somebody who has administrative responsibilities as the primary portion of their job description so that there is a another staff person who might be holding a lot but still has a focus on administrative work whereas for the organizations who don't have a plan it was mostly the executive director who was the person who was responsible and what we find happens here is is that executive directors on top of these administrative responsibilities are also in charge of fundraising setting the vision you know recruiting and managing the board they may or may not be great at navigating the bureaucracy of retirement and administrative work but at smaller organizations you're often at the mercy of whether the executive director has this specific skill set which may or may not be applicable to other work that the executive director is doing and so the decision to bring on somebody with operation who's focused on administrative work is really crucial but obviously there is a um there's a cost for that and so that ability uh to bring somebody on to see the need for operations which is important to see at an organizational level but also important to have funders who support that um really end up dictating whether people will have retirement or not we had a number of people who said things like i've been the solo staff member so i i couldn't do it so if i'm the executive director it just feels hard i'm not i'm not gonna do it and it ends up being a little bit at the whims of the executive director or their specific talent just because people organizations aren't offering plans it doesn't mean that they're not interested in plans and so there's a quote here but there were i feel like you know 10 or 20 quotes that we could have put here that really reflect that one it's hard to prioritize and because we don't have that many people there's not a demand for it but also there doesn't seem to be plans for what we need right there's not a group that offers benefits for non-profits at a reasonable price there's not a way to set it up without it being so burdensome so people it wasn't that they were like we don't need retirement it was i really wish there was but there's not things that really meet our needs and this was really interesting because in fact um there are low effort plans and low effort is a term we've come up with you can definitely put in the chat if you have recommendations of other ways of naming this what we're sort of referencing are plans in which there is not a high administrative burden and specifically we're speaking about plans like the sep or simple plans plans set up by congress where there is not any required reporting on the part of the of the business or the organization that has it where there might be limited choices but there's also limited costs and not much for the administrator to do and part of what was interesting here is when we asked organizations who don't have retirement plans about their familiarity with plans there was a good amount of familiarity with 401ks that do have cumbersome reporting requirements also discrimination testing there's a lot of involved with it a slightly reduced amount with 403 b's but when you see the very familiar or even somewhat familiar question for the scp and simple plan two plans again that were set up specifically for small employers including employers with just one employee no administrative or limited administrative burden right you have less than 20 percent being even somewhat familiar with this meaning that people don't know about the plans that might be most appropriate for them right so there's this significant gap here it's really important for me from my perspective having been a really overwhelmed um non-profit executive director to say none of this is intended to shame right nonprofit administrators i think it's it's to reflect the level of overwhelm and the gaps in in getting this information out there that people don't know about the thing that might serve their needs because of the sense of overwhelm in addition to a lack of awareness about these scp and and simple plans there also was a lack of awareness of state plans state facility facilitated ira plans like there's one in oregon called oregon saves also calsavers in california and then massachusetts is really interesting particularly because they have a plan that's actually targeted at non-profits we didn't ask about awareness of these plans in the survey but i think part of what was interesting is for example that quote that we looked at before where someone was like i really wish there was some kind of plan for non-profits where we could share our burden they were from massachusetts and in massachusetts there in fact is a plan right there's a state plan where there is a low fee option for nonprofits but people aren't aware of it so one of the significant impacts of this capacity gap is um a lack of awareness even of the tools that might be relevant for you and the bigger impact which we shared at the beginning is this idea of well if i work at a small nonprofit i just might not get retirement for a few years maybe i'm early in my career i'm just doing this for a short time but what we know again is when there is a failure to contribute to the plan or contribute very much to a plan people are put at a real disadvantage so going for a year or two years or five years without a retirement plan has real negative impacts on the workforce who's working at these small organizations so that's the capacity gap next we're going to turn to the transparency gap and what we see in some ways that seems like a contradiction here um more than 50 percent of organizations who offer retirement plans reported that their main driver and how they decided what the plan would be was the employer cost or the cost to employees so there was a real concern again with costs which makes sense non-profits that were concerned with costs at the same time though they also indicated that they didn't have a regular practice of looking at fees and or they had not reviewed their fees in the last year so we have a thing where at a starting point um organizations when they start a retirement planner like we are very concerned with costs but then on an ongoing basis they don't seem to be checking into those fees and that has real implications one of those implications is because costs in general have been reducing in part because of technology technological advances and if you're not aware that you could be getting the same services for cheaper you're in fact spending more as an organization and perhaps more significantly your employees are paying more fees are complicated that's why i have there are many kinds of fees but in general just for purposes of our webinar i've broken it up into three different kinds administrative plan fees investment fees and individual service fees administrative plan fees can be paid either by the employer or the plan which is not really a person which really means via participants investment fees are paid by participants and these individual service fees for example if you're trying to withdraw money from retirement can be paid by a participant i want to really focus here on administrative plan because this is where an employer does have some choice in the matter and what we found is for many of the organizations we surveyed employees were paying administrative fees so for 40 percent of organizations they said that they shared administrative fees meaning that they were paid in part by the employer but also in part by employees in addition right and this is a fairly significant number is 18 of organizations didn't actually know and again i'm going to repeat that there's no intention i have here of shaming i think this is true for me when i was an administrator that i wasn't sure and part of the reason that one can be unsure about how administrative fees are divided is because it's really challenging to understand the language that is given and so this is an example that one of our survey participants provided us about um which is a fee disclosure so this fee disclosures are something that the department of labor put into effect i think almost 10 years ago now after protracted litigation a lot of lobbying against this from the financial service industry but the big win was financial service providers retirement plan providers are required to disclose their fees the challenges is they could disclose it and it still might not be understandable so there's a lot going on here part of what's going on is there's a combination of percentage amounts as well as dollar amounts and trying to figure out how much this actually means in fees is really hard because you have to go back to see what's the total that you're taking the percentage of and add it together and so it can be i think really challenging you can look at this and then it is always going to involve more work to actually figure out a number because you can't combine terms that are not like so you can't combine percentages and dollar amounts so you need to actually do a good amount of math to get there to figure out what what the fee actually is the second thing which is even more challenging is this language which says that some or all of these fees may be offset so if the question here is who is paying for these fees is it the employer or the employee they in fact aren't telling us they're like it might be the it might be the employer it might be offset it might not be right so you could read this fully digest it and then not no because it says may right so you actually aren't finding out um who's paying for it and finally in terms of how it is going to be offset it says revenue sharing from plan investment options which if you are reading this and you haven't been steeped in retirement literature and understanding it it can feel like okay it's from the plan some neutral you know third entity but in fact what that often means is it is coming from participants there's some really good research around how fees have been hidden there's a great um report that got put out last year by a group called employer fiduciary which we cite to in our report which finds that 91 of retirement plans have hidden fees most often in the form of revenue sharing and so we find that a lot of times that the revenue sharing means that plan participants are paying for it but they don't actually know so this combination means that it's really hard to know what the fees are and i think more significantly is even if they disclosed this and you were to understand it it's really hard to know what the long-term impact is i'm just and i apologize for a moment i'm just going to go back up to the slide i shared at the beginning about impacts because i think it's really important to to look at here when we talk about sorry about this please okay here we go is retirement plans really like to show you these kind of charts i would say right plan provide there's lots of shaming of how old are you you know what you're too old to do you know save a lot of money you better get started retirement plans i feel like and you can put in the chat if you have been shamed by these and it makes you feel bad about yourself that happens a lot i think the the charts that we never see provided by retirement plans are the long-term impacts of fees and so that fee disclosure we were just looking at that you know the text there's lots of confusing terms there but even if you figured it out and were like okay right now i am paying one percent in fees right now it equals this amount all they're telling you is for a specific moment what the impact is what they are not showing is what the long term impact of those fees are right because similar to the way that your savings get compounded these costs are compounded over time and so knowing the amount of the fees at that moment is one thing but what's actually really important and again i shouldn't actually say no one ever shows this i'd be super curious just to know if anyone's plan providers provide this and saying here are the fees and here's how it's affecting you over the long term is there's real losses um that happen to people because of the fees and i think one of the things that happens when people get to the age of retirement and so this chart is showing at age 65 what you have and so if you've been paying two percent in fees you'll have 243 000 because there's not a provision to you made that says well here's what happened to fees here's what you have left i mean although i'm not sure at that point they used except you could feel sad about it but people often don't know they just think oh this is what i've gotten 243 000 there isn't a clarity that someone has been extracting that money and you've actually suffered a loss and because of that there isn't necessarily anger or frustration about it it's sort of well this is what i have in retirement and so one of the things that feels really important and part of what we found through this process is just even looking at this and being like wait what's happening here and how come i've never seen this is making sure that we're under we're explaining that something is being taken from you in retirement it isn't just that you are saving less and so the fees that lack of transparency it's about understanding your fees at a given moment but in addition i think there's a huge lack of transparency and no obligation for retirement providers to provide any information about the long-term impacts of that and i'm just gonna move forward i'm just gonna fast forward for a second to thanks for your patience [Music] to the next slide okay i'm going to go to the values gap now so that was the transparency gap in terms of the values gap one of the questions we asked we asked a number of questions about plans and how people felt about plans so we had eight different indicators the second lowest score is was on this question of how would you um characterize um whether they're the alignment between um investment options in your retirement plan and your organizational values and so on a scale of one to five people put a 2.84 meaning there isn't that much alignment between the what you have as options of what to invest in in terms of retirement and also um your organizational values at the same time which is why we've called this a contradiction 75 percent of organizations reported that they are satisfied with their investment options so what's happening here um i'm sharing some quotes because i think this gets at what when we interviewed people what people are are really reckoning with is you know this bottom one is i would love to provide this magical plan for my team but i don't think one truly exists so people are not dissatisfied necessarily because they're like if it i can't really complain i'm just dealing with reality um similarly there's a fear that like if i have to support good causes i don't want it to sacrifice returns i don't want to be punished financially and this quote is about someone saying individually i don't want to be punished we also heard a lot of administrators saying i don't want even if i ideologically feel really committed to this i don't want to burden the employees so more important to me than having something that values the line is that there be choice because it's not fair to force this on people but in general there was a deep interest in it a clarity that there's a lack of alignment but also a sense that nothing exists like this um that could happen so what we see is kind of a hunger and a desire but also a feeling of uh we don't know whether this exists in addition to um [Music] the specific um investment options within a retirement portfolio we also found a real values alignment gap in terms of at retirement advisors and and this was the single lowest score that that um a plan received um was on this criteria that on a scale of one to five um how engaged are your employees it's 2.49 it was really low this sentiment of like eyes glazing over and very very hard to understand is like you know i feel like it's this comment times a thousand it's really boring and then it's really challenging to understand nobody is engaged um and then i think this was maybe the most common sentiment but then again a number of people also were saying you know we can't relate to the advisors who are coming um they don't seem to reflect us we're mostly getting sort of straight white men and also straight white men who don't work at non-profits and are talking about retirement as sort of like stepping back and seeing what you've earned and traveling and this doesn't seem real to us and so the impact of this is just a lot of disengagement of sort of reinforcement that retirement is for these other people who can understand this training who look like the person who's providing the training but we've we heard very little about quality training we did hear that some people had great experiences with their plan providers that was primarily around responsiveness if we have a question they'll answer us we didn't actually get a single example of really quality training from a provider we did have places where the administrators would step in and try and do their own training not their job but feeling like there's such a gap we need to bridge this i'll do it but there just doesn't doesn't feel like there is any incentive for current providers to really provide quality training um and yeah lots of examples of boring and challenging and i'm sure many of you have experienced this as well i think the best comment which i didn't type here but i thought like summed up my experience was like the people who come and do the training feel like they are bored of their jobs and i was like oh that's right they're they're even bored of it and it feels obligatory but none of it feels engaging and relevant finally we turn to the equity gap and so we talked about the fact at the beginning the capacity gap that not everyone who works in the nonprofit sector has access because not all organizations are providing retirement benefits and so smaller organizations because of capacity a lack of capacity as opposed to a lack of desire are often not providing it in addition even at organizations where they are providing retirement not all staff have access to it and specifically here we're talking about part-time workers and so we found that in general um the the most frequent sort of way that retirement is provided is to all full-time workers the majority you know of organizations do provide it to some part-time workers um but we only have you know a little bit under a third where all full-time and all part-time workers are eligible to receive retirement benefits and so given that we also know that part-time work tends to attract people with more precarious financial situations whether they be caregivers whether they have other additional right additional responsibilities or limited opportunities i think we know that essentially part-time workers are often in a more financially vulnerable state and it often gets reinforced on whether or not um they get access to retirement even at those organizations who offer it in addition right it could be that you do get access but you're not participating so what we found is on average for organizations that are providing retirement only 70 on average of eligible participants are enrolled and i say on average 70 but i really want to emphasize the this thing the line on the bottom which is we weren't seeing that you know everybody was sort of around 70 like it was like 65 to 75 it was actually a really wide range where we had a number of organizations um who offered retirement and had less than 25 participation and then a number of organizations that had a hundred percent so rather than it being um that everyone's sort of hovering around this there was sort of a really uh wide range of participation levels in plans um and so we wanted to dig into that to try and make sure we understood what was happening there and we found that the the single largest factor that contributes to participation was around employer contribution where plans with an employer contribution have greater participation than those without an employer contribution and then even within employer contribution there's significant differences so that plans with a guaranteed or a non-elective contribution where basically you might have to sign up for the plan but that's all you need to do and then you're given it have greater participation which makes sense because the employer is putting in the money then plans that have a conditional elective contribution are what we often call i think in parliament a match so that if there's going to be a match it what that means is a certain amount of people aren't going to participate because they can't put in enough money to to activate the match but if it's a guaranteed contribution they're still going to get the money uh while in general access to retirement plans are linked to size of organization these specific factors around participation um plans with an employer contribution or guaranteed these aren't linked to size of organization and the the factor that we found that actually contributed to these are around whether organizations were poc lead and white lead and i offer these definitions here these come from building movement projects and it's an attempt to broaden our definition of poc-led to move beyond just who the executive director is but actually thinking about overall staff leadership and board leadership and so what we find here is all things being equal meaning regardless of size regardless of what type of organization you are regardless of your geography poc-led organizations are more likely than led organizations to extend retirement benefits to part-time workers so 80 of poc led organizations extended benefits to some or all versus 44 percent of white led organizations and similarly poc-led organizations are more likely to offer a guaranteed employer contribution versus a conditional employer contribution i think these are really interesting to look at because there's been you know within the sector there is a lot of talk of the importance of diversity and i think what we see here these really concrete examples of how that plays out in terms of um policies within the organization on its face you know whether or not you extend um retirement benefits to part-time workers or whether or not your employer contribution is guaranteed isn't a racist decision but it is a racialized decision and if you are someone who recognizes that not everyone can contribute at the same level because you've had your own experience with that you might have policies right that are more inclusive and i think i feel really excited about this finding in terms of just these concrete ways in which there are differences based on the lived experience of who's in leadership at the organization in terms of what equity looks like in addition um one of the things that we found that was really interesting is when we spoke to organizations who um didn't have full employee participation we asked a question of are you trying to increase participation and 75 percent of organizations um who currently don't have full participation had not introduced any workplace initiatives right so what's interesting here is this real sense that we found that when there is limited employee participation or just when employee participation is not full many the vast majority of employers either didn't have capacity i think that's real or did not think it was their responsibility to figure out participation right to increase it the other thing we found was that when for the 25 of organizations who were doing things they often were focused on doing more trainings they talked a lot about increasing financial literacy and in many ways they acted as if the responsibility was basically of like we need to help these employees who don't know much they didn't see it as a structural issue rather they saw it as a shortcoming you know on the part of employees but they needed to train them uh improve their financial literacy as opposed to shift something in their plans and what this misses is a lot of the structural issues within within retirement plans and so we wanted to go through a list of these because i think this is really important because when we focus on training and financial literacy i don't think these things are bad um i do think that it places the onus or the burden or it problematizes employees as opposed to a broader structure and so what's useful to think about is there's lots of options within retirement plans and how these plans are designed can really have an impact on whether the retirement plan an organization is offering is reinforcing a racial or a generational wealth gap or it's in fact offsetting it so one of the realities is for people who don't come from generational wealth is they have higher expenses the leading higher expense is going to be student loan debt payments but in addition a building movement project one of the things they found is that black or latino workers within the nonprofit sector are more likely to be supporting more than themselves with their salary whereas white workers are more likely to have more support than their salary for themselves so again if you imagine someone is starting their career they have a salary if you are black or latino it is more likely that you are supporting more than yourself with that so you have more expenses and if you're white it's more likely that someone else is supporting you whether that be a partner a parent or somebody else the impact of this is that chart that we saw in the beginning is that you might not be putting in money because you're paying off student loan debt you're supporting your cousin you're supporting your parents right you don't have the money it's a really big deal if the only way that you get the employer contribution is through the match because you are probably unlikely to be able to maximize that match the plan design can really work to reinforce or offset this for example you can have automatic enrollment in a retirement plan meaning that people are enrolled when they start so the default is that you are enrolled in it as opposed to having to make that affirmative decision to enroll in it escalation means as you as your salary goes up it increases the percentage going to retirement again rather than waiting for months of like oh i'm going to do this it defaults you into it so you can always opt out but it means that you're not going to lose money i think the biggest thing as we already talked about is whether there is an employer contribution and how that employer contribution is structured and finally how the fees are divided right our employees having to pick up some of these administrative fees in which case even if they're putting money in it is um reducing their long-term savings the second big factor is around lack of trust in advisors which is known among retirement experts as investment risk what we find is that often uh people if you are getting advising um or training from you know some kind of planner or advisor it matters a lot whether or not you trust that advisor currently i think about three percent of financial planners around retirement are black or latinos so if you are black latino it is unlikely that you'll find somebody who looks like you we also had heard before in the values gap section that it's very hard to find someone who understands nonprofits it's hard to feel that people understand what it means to be queer and when you don't trust you often default to low risk investment options meaning that if someone who doesn't look like you who you don't trust says oh you should really choose this high risk investment option it's like thank you but no thanks i'm going to choose and go with what i know low risk a low risk investment option means that you're going to get lower returns and in practice it ends up acting like a fee you get lower returns on your investments and so there's a real question of whether the trainings or advisors are engaging the staff again if you come from generational wealth you likely get financial advising from relatives or you know private advisors that your family has if you are the first in your family to go to college um you're the extent to what you're getting advising is usually through your employer's plan and so it makes a really big difference whether or not you can relate to the advisor um finally is what we call life cycle moments and emergencies and life cycle moments are sort of key key moments in your life like having a baby buying a house where your expenses go up if you come from generational wealth you're most likely to get what's called an inter-vivo wealth transfer that just means you get money from your parents who are living you're not waiting for them to pass away but times these life cycle moments oh you're you're buying a house we're going to help you with the down payment oh you had a baby let's pay for help pay for child care so it means that you're most likely to get a transfer of wealth from family members at this moment if you don't come from money you're most likely to have to withdraw from your retirement savings which is known as a leakage risk meaning money is coming out is often not replaced and so you end up with lower savings in addition there is considerable research about um primarily black and latino families and what are emergencies and the extent to which if someone else has an emergency not a life cycle moment but just somebody needs money for this you're more likely to have to provide it and that might mean either pulling money out from retirement or paying it but not having money to put in retirement and so often what that just looks like is your long-term savings are lowered um and so apologies for the grammar error one of the questions that we need to ask is is whether there's penalties for borrowing from the retirement plan and is there a separate emergency fund that people could borrow from that aren't retirement so again all of these are plan design elements that depending on how you structure means that you even if you offer a retirement plan right that's one step towards equity extending it to part-time workers is one step of equity but then there's all of these other aspects that can end up reinforcing a racial wealth gap and so that the retirement plan in fact benefits those who already have more and so these are some ways of thinking about it so ultimately when we look at all of these gaps the four gaps capacity transparency equity and values we end up with sort of a pervasive sentiment um that retirement is not for us that's operating at four different levels on an ideological level it's the sense that building wealth is bad and i think this often gets reinforced by the folks who are providing retirement trainings it's like oh i'm not planning on having you know drinks in the caribbean when i retire like i can't relate to it and this is for those kinds of people um not for me and i care about movements i'm not trying to build wealth and i think there's a real need to figure out rebranding maybe we think about retirement reserves versus wealth but this real sense of like this isn't right um institutionally i think what we find is for non-profit organizations that you know spending money on retirement increases your overhead costs and that while there has been a movement in recent years to say that you know over having high overhead is not a sign of being less effective or less committed or less down it still happens right that it's sort of why are these costs so high aren't you trying to focus on the people and so that you might not receive certain kinds of government contracts if they're not building in that overhead cost you might not receive money from certain funders you might get lower ratings on these charity rating things like charity navigator if your overhead is high and the reality that smaller organizations have less infrastructure and if you're lacking an operations person you don't necessarily have someone to take on the administrative burden of retirement interpersonal in terms of how we interact with people and so this is right often going to a retirement training is like oh right similar to what i said with ideological is just like i don't understand what's happening and rather than being like they are wrong they should be doing this in language that i can relate to it can just be like you know what this retirement stuff is like for other people not not for me not for movement people not for grassroots people and there's also these beliefs i think that often come out whether or not people say them which is like well if you were really committed you know you wouldn't be focusing on retirement or you wouldn't be focusing on your wages like why are you asking for so much we're here to serve the people um and then in terms of participation it's the sort of sense of like well they just aren't interested in savings for retirement rather than looking at all the generational wealth reasons people might not be participating so when we see that 75 percent of organizations aren't trying to increase participation there are interpersonal messages of retirement's really not for you right it's not about it and and probably most sort of damaging and i think the ways in which we reinforce these inequalities is this way in which it gets internalized in all of us whether we be you know just workers or administrators within the nonprofit sector is and we saw this really really pronounced um throughout the survey findings and i'm really excited that we'll have a lot of quotes on this in the report is this real sense of like if we are working on increasing wages if we are working with very poor people who have nothing spending money on retirement benefits will take away from it and so this real kind of thing that people feel really stressed about this reduces my commitment whether or not the people around them are saying it is an internalized fact and just what will people think of me if i'm focused on retirement do i seem selfish we had a few organizations who said well our peer organizations don't offer retirement and rather than saying oh we should offer retirement right it might be a competitive advantage we'll get recruit people it was sort of they'll think we are not as committed if we start spending on retirement what will people think of us and so this internalized one feels really real and you know you can feel free to share in the comments if you have any of this or if you've managed to sort of escape the hold of these um of these beliefs and so what do we do with all of this um broadly i think there's sort of three parts one is recognize and when we say there's all this like internalized or this sort of pervasive sentiment it's really important to recognize this and name it also one of the instincts that we often have when we recognize problems in the nonprofit sector is to say we'll just do it ourselves so if these non-profit administrators don't know about these plans they should find out about it and i think the answer is no the answer cannot be that those who are the most burdened have to take on more in fact the cost but the financial cost of retirement as well as the information costs involved with finding out about appropriate plans finding out about how this promotes racial equity those costs have to be subsidized and so there is a need for others right like funders and intermediaries to subsidize both the financial and the information costs and finally there's a need to organize and make demands around recognition of the nonprofit sector as employers and the importance of retirement generally so just a little bit of a deeper dive into these when we're talking about recognizing um we are saying that the nonprofit workforce really has to grapple with the fact that all workers deserve retirement right including part-time workers including workers early in their careers workers at grassroots organizations right it isn't that retirement is something saved for fancier more established institutions again i think it's really important to remember that investing early in retirement makes a really big difference so the idea of oh you'll catch up later really puts people at a disadvantage and so it's really important to be like we're talking about all workers not some employers really need to understand the importance of starting early as well as the role of fees particularly these administrative fees so choosing to share fees puts your employees at a disadvantage and puts them at a disadvantage that they might not even realize right so the onus is on employers because employees may or may not make that demand because it's really hard to know and finally for funders and intermediaries right it can't be that you right one of the really important takeaways from this is not saying something like oh retirement is really important so we're going to ask you now hey are you providing retirement and if you don't we're going to ding you right it can't be used as sort of a sorter as a judgment it has to be of of this isn't because organizations don't want to it's because there's insufficient administrative capacity so what can we do to offset these costs as opposed to how can we incentivize organizations to provide it right because if it's too expensive both in terms of labor or money people aren't going to do it so specifically yes subsidizing is covering the cost of administrative fees again if these are shared it it puts employees at a detriment making employer contributions recognizing that early investment makes a really big difference and also that this lack of financial service providers that reflect the sector as a whole is a real problem and that there needs to be a pipeline of that that gets funded and supported for intermediaries by which we mean sort of non-profit associations you know capacity builders technical assistance providers really think the focus here is around reducing information costs so what does it mean you know to know what types of retirement plans are actually available for you what does it mean that rather than every organization having to do a training for their workers if intermediaries held you know workshops for the non-profit sector as a whole so that workers could really start to get empowered about understanding it and one of the things i've said here is provide training by nonprofit specialists i don't think this is true for all nonprofit associations but it turns out that a number of associations the way in which you learn about retirement the the sort of training provider is often somebody who is in the private sector who offers to do a a retirement workshop for free and maybe they'll get you know some people will go to them then and that's how it works out but often those trainings are boring and eyes glaze over and so it's really important rather than just saying well they'll do it for free and they'll make it relevant to the nonprofits that there's actually people who are grounded in the nonprofit experience understand how to speak without jargon who are providing this i think that's really crucial that we stop relying on sort of donated services of the private sector in order to be who is providing this like we need high quality training and i think high quality politicized training of the relevance of retirement and finally in terms of thinking about organize right what was interesting is we looked at a lot you know there's been a huge rise in nonprofit unionization and nonprofit demands as part of the work in in looking at the issues around retirement in the nonprofit sector we looked at a lot of the demands and what was interesting is that retirement wasn't necessarily showing up as a primary demand that said i think there is an incredible amount of labor consciousness currently within the nonprofit sector and i think part of the way that this is going to happen is leveraging that and making sure that this is not a top-down approach oh you know you poor people you need retirement but actually again a political historical understanding from non-profit workers that retirement should be a public shared good that they deserve and there should be a demand for it for employers i think again a sector-wide approach so rather than trying to figure out how to how do we figure this out from our budget how do we you know figure out how to do these fees and understand what values aligned options are there is sort of saying hey are these non-profit associations these capacity building um organizations really need to step up to serve all of us rather than us taking it on ourselves and so really recognizing that every organization having to do this on their own is really inefficient and finally i think there's just a lot for the sector as a whole whole this is my all of recognizing nonprofits as employers i had spoken earlier about some of these what we were calling low effort plans the sap and the simple if you are a small business you receive a tax credit i think of up to five thousand dollars a year for for starting a new plan if you're a non-profit employer there's no financial incentive for you to provide it even though there's a high volume of small you know small businesses or small organizations that are run by nonprofits but there's no incentive because nonprofit employers are not recognized as employers the way that small businesses are so the government isn't creating incentives um there needs to be far greater regulation of financial service providers so that's not just around disclosing fees but questioning how these fees are being charged how they're being calculated why small organizations are at a disadvantage why financial service providers are benefiting those who already have money with retirement but a real willingness to get out there and do a lot more advocacy work and then you know social security which has always been an important prong of retirement security it is in all of our interests to ensure that's funded right not just limiting our focus to employer provided um benefits so that was some of the highlights of the report i really thank you for for staying on so long the report itself we're hoping to release in early july which will have a lot more detail about all of these and in the report itself there'll be a lot more content around the political history of retirement it felt hard to get into here but sort of recognizing how retirement started what does it mean and the title around reclaiming retirement for all is very intentional it's not something new but in some ways there's been it's more that there's been a collective amnesia for maybe the last 20 to 25 years where we are thinking oh we we need to get better at this forgetting that there was a time and a place where the vast majority of americans had retirement and they were not in charge of bearing the risk of it so we will have political history and then we'll have a lot of benchmarking available for a lot of non-profit organizations so we'll have a lot more specifics of at every given size what type of plans are organizations offering are they offering a guaranteed contribution how much is that contribution so really specific i think in more detail than we often find so that organizations are able to see what their peers are doing particularly in terms of size because we recognize that that's a large factor and with that i think i'm closing yay thank you so much chetra for all that amazing content and analysis we do have time for a few questions um if we don't get to the question that you submitted we are going to share our contact information both and on a slide at the you know in a few minutes here at the end and then we'll also send a follow-up email with that um there are a few questions here about encouraging participation so one of them focuses on um how do you encourage staff to participate when they're aware of the benefit they know there's an employer contribution but they still just don't seem interested in it and then there's another one that's you know kind of similar how do you encourage folks to continue to invest even during those personal life cycle moments or if there's market volatility sure so i think in some ways part of it is if you reframe the question of how do we ensure that people are continuing to accumulate retirement savings when they don't yet see the benefits and they have other expenses right and part of it is you guarantee the contribution so rather than the employer contribution being a thing that you need to prove yourself to deserve so you've proven you care about it it's sort of maybe provide it and then people will catch up but not making it conditional feels really important in terms of emergency savings i think this is something i should be more explicit on the on the subsidies slide i think it's really important and this can be either at an organization or a sector-wide level is to say here is an emergency loan fund for individuals who need money for these specific lifecycle events who need money for this but are not having to pull from retirement uh there is a trend within retirement plans now to say that there's two kinds of plans there's the retirement plans and then sort of a savings plan where a certain amount goes into that allows you to withdraw without any penalty so i think at a basic level you can help employees so that they have their own savings to pull from that aren't penalized as an organization you can have a fund or just pay people more so they have it but as a sector we can really think about what does it mean to have a sector-wide emergency fund and again if part of the commitment of the sector is really thinking about racial wealth gaps this reality of what an emergency does to people across different races is really huge and making sure that there are some buffers built in feels like a really concrete effort that can go a long way but again i think not saying that someone has to be interested in order to get the the retirement savings because again there's such a cost there because it means that they lose out on those early years and so why do you need to prove it like why not provide it and then work on their interest versus making it conditional great thank you so much for that response um we have someone else who asked um uh or or they share it as a millennial i've been socialized not to rely on social security as a viable option for retirement at all there's this narrative it's gonna run out you know we aren't gonna have access to it so how do we shift that narrative that social security automatically won't be available to us or you know just gain more agency in this area um that is a great question i think well i mean what i will say is i think millennials um are leading the way in many ways right so if i ask the question how do we talk more about mental health how do we talk more about the importance of you know flexible work schedules i feel like millennials have led this way in making a lot of shifts within the nonprofit sector how do we talk about unions is i think millennials have led this conversation retirement has been interestingly absent and i think part of it is we need to start providing a lot more political education about the reality of social security that social security out of any government program is the single largest program that is most likely to offset the racial wealth gap we in fact are not uh necessarily running out of social security but talking about it in that way is a way to diminish its importance and there are ways to look at the numbers and see what's possible and that thinking of employer-provided retirement not as a substitution but as a supplement to social security so that social security funds can primarily be used to to support those who are most in need one of the specific demands that can be pushed for is to increase the amount of income when you're earning that you provide money to social security so social security when you're paying payroll taxes it stops i think currently at 138 000 and so once you make over that no money goes into social security anymore often people who are learning above that don't need social security so they're not interested in financing it but if that social security income level went up um social security would end up being um even more progressive than it is it is progressive but the the way that the income level stops ends up making it in some ways a regressive measure so part of it is to be like everyone should be paying into social security regardless of whether you need it um but then i think the other thing is is really building on you know to your generation the millennial push um around nonprofit unionization and real these real shifts and working patterns we see and to see retirement again as a crucial part of the racial wealth gap i think there's been a really inspiring amount of labor consciousness as well as racial consciousness and i'm like but i think retirement is where these two i mean i'm biased but i do think that retirement is where these economic justice and racial justice connect in the workplace is retirement far more than salaries and so given that uh millennials right i think have been at the forefront i think continuing to fight for it but also really good political education that connects those dots and really explains how retirement is not an add-on but is a fundamental way of addressing or perpetuating the racial wealth gap great thank you chitra and thank you everyone for coming uh we are out of time i know there were a few questions that didn't get answered i'm gonna put up our contact information in a moment um uh you know i want to thank our co-sponsors again for helping to make this event such such a success and like i said there will be a follow-up email with a recording of this webinar the slide deck and our contact information if you want it um justine is sharing a link right now in the chat to a very brief session evaluation we would love to hear your feedback one super quick plug before we close um just futures has been hosting a series of webinars that are focused on social justice investing so the first two sessions already happen you can watch the recordings um um at the link that justine is also going to be sharing in the chat on our website and then the final session in this series is coming up on june 22nd and we'll talk in that session about how just futures is trying to democratize access to regenerative economy funds using retirement savings so that gets i think marlena's question in the q a but also happy to connect before then if you have questions for chitra or i please do feel free to reach out directly and for more information on uh just features you can visit our website thank you so much everyone uh it was great to see all the engagement in the chat and we look forward to continuing to engage
Posted in Retire Wealthy, Retirement Planning