Interview with Gay Lynn Bath, Director, University of Oregon

Thursday, October 10, 2019

Gay Lynn:

I'm the Director of the Retirement Plans for the Oregon Public Universities. I'm actually employed by the University of Oregon but we have seven Universities that are all in the plan. Over the past decade all of the universities became independent and they used to be under the chancellor’s office but that was disbanded in 2014. The University of Oregon agreed to take on the responsibilities for all seven of the retirement plans for all seven campuses. That's why I am a University of Oregon employee, but actually the plans are available to the seven public universities.

The universities offer a 401(a) and a 403(b) plan, and we refer to the 401(a) as the optional retirement plan because it's optional to our PERS pension plan (Public Employees Retirement System), which is run by the State. The 403(b) plan is a supplemental plan.

“Once they make the decision it is irreversible”

If you're a non-classified employee (non-union) you have the option to choose when you get hired between PERS or our optional plan and they have six months to make that decision. Once they make the decision it is irreversible, if they pick PERS, that's the plan they will be in during their employment.

We find that most of our employees across the state are in a PERS pension plan because we have a lot of classified employees. Of course, some people just like the idea of a defined benefit plan rather than a cash balance plan, which the 401(a) is. One of the interesting things is that the 401(a) contribution rates are tied to PERS. So, whatever the PERS contribution rates are, those are our contribution rates using just a slightly different calculation. So our contribution rates in the plan are pretty favorable to the employees.

We added a tier four in 2014 and that one is not tied to PERS and new employees go into that tier, and it doesn't matter what PERS does; that one's going to stay the same. Therefore, while it's not quite as rich as the other ones, it's still a very good plan.

The 403(b) plan is supplemental and participation in the 403(b) isn't high; in fact, I know it's less than 30% of all employees. I think a lot of PERS employees don't think they need a supplemental for whatever reason, but with the new tier four optional retirement plan, a participant has to put at least 4% in the 403(b) to get a match of 4%. So we find that about 90% of people in that tier are getting the match and then we follow up on it and remind them that they are leaving money on the table.

The campuses are really the ones who are responsible for meeting with the employees and giving them the information about the plans and hopefully, when they're hired, giving them good reasons to sign up for the 403(b).

“We’re meeting with our legislative group on campus to see if they will help us bring forward a bill to change that law”

DC Institute:

You mentioned that the participation was low in the 403(b), what are you doing to increase that?

Gay Lynn:

Well, we like to try to get them in the 403(b), and I would certainly like to see higher participation in the plan. With the 403(b) plan you're required every year that every eligible employee receives a 403(b) Universal Availability notice reminding them about the plan, letting them know they are eligible for it at the university, and letting them know how to sign up and what the new IRS contribution limits are.

We send it out to the campus benefit managers and they have to send that out to all of their employees. We require that they confirm this is done each year.  We also have a campus newsletter that we send out on a quarterly basis with information about the plans.

Unfortunately for us, as a public plan in Oregon we have garnishment law in place, so we can't do auto enrollment.  I would definitely love to get that law changed, and this week a professor at my university (who is also on my investment committee) and I are meeting with our legislative group on campus to see if they will help us bring forward a bill to change that law. We've had push back on this from the union but we think it's just that they don't fully understand what a change in this law means. Even if we changed the law, it doesn't automatically mean that auto enrollment would be put in place because each public entity would still have to get their unions to buy in, and their governing bodies to approve it. I feel that that auto enrollment is what we need to help us get participation rates up.

I think it was unfortunate that when the Pension Protection Act of 2006 was passed, it brought auto enrollment to the private sector but not to the public sector. At that time, Congress made a decision not to include public plans because the law would override state law. Therefore, I don't think that they wanted to step on anyone's toes, which I still think this was a bad decision and so I don't know if we're ever going to see it across all states. I think each state is going to have to deal with these garnishment laws and a lot of them have done it already and their enrollment has greatly increased. There are a lot of public plans now who have either changed their state law or didn't have that garnishment law in place and they've been offering auto enrollment and it's been working out pretty well for them.

DC Institute:

Well hopefully there's a precedent for you to do the same with the University of Oregon.

Gay Lynn:

I hope so. We actually have a few unions in the state that opted to do it in their bargaining agreement for a couple of cities and counties in Oregon. So it is definitely possible.

DC Institute:

There are a lot of legislative changes regarding DC plans currently in the air right now, what are your thoughts on this and how will it affect you?

Gay Lynn:

I don’t think a lot of the changes coming out will affect my plans, other than I am hopeful that 403(b) plans will be able to add Collective Trusts to our lineup.  Currently, we can only use mutual funds and annuities.

“Every conference I go to, if there's a communication session then I make sure I go to it, because, I want to know how to better communicate, especially with younger people.”

DC Institute:

What obstacles have you faced when trying to encourage employees to participate in your plan?

Gay Lynn:

Communication is a big deal, as you are probably aware. Every conference I go to, if there's a communication session then I make sure I go to it, because, I want to know how to better communicate, especially with younger people.

We all know that emails aren't always the best way to communicate. For me as a boomer, I am going to prefer emails, but I don't think younger people want to deal with emails. It would be great if we could somehow be able to text them, but we don't have access to that.

We have also found they don't like paperwork and notably at my campuses, two out of seven, we're able to do electronic signatures so they can fill out our salary reduction form online, but the other campuses have not gone there yet.

Every time you either enroll or change your contribution rate you have to fill out a salary reduction agreement and I think we're going to have to get a little more creative and use newer technology to draw in the younger people. One of the issues we are also facing is that the younger employees can't always afford, or are not interested in retirement right now. They have other burdens that they are focusing on, such as student loans, expensive housing and so the last thing on their minds is saving for retirement. That's where I think auto-enrollment would be hugely beneficial because they wouldn't miss that money coming out of their check, and it probably wouldn't then be an issue.

So, for me the hardest part about communicating is that I don't even have access to everybody's emails, so if I want to send something out, we have to send it to the benefits managers at each campus and ask them to send it out and rely on them to do it. So I think some new technology is something that would be great for us to reach out to new and especially younger employees.

DC Institute:

What have you found to be the most efficient way of interacting with your participant base?

Gay Lynn:

Each year we host benefits fairs, most of these are centered on healthcare and insurance because you have to re-enroll every year, but we (retirement plan management staff) are always there and our record keepers are there with us. I should also mention we have three record keepers. Two plans are open to new enrollment, and one has been frozen for over ten years.

We then started having what we call 'expos' at the universities and those are only retirement themed. We only focus on retirement issues, and we make sure that PERS is there as well. We have found that those have been very well attended. We've done this for a couple of years now and this year I think we're going to do one at OSU, which is our biggest university.

We get really positive feedback and people like that it is just retirement focused. We try to make it as inviting as possible, and so we have food and the vendors have some fun things as well as the actual learning about retirement.

Our record keepers hold a number of workshops during the expo, as does PERS, and they are all centered on enrolling and saving for retirement. I think if we can get the word out and we do it in a timely manner, when there's not much else happening on campus, we can get employees to come to those. Because one of the other things that I read about the younger generation is that they still do like meeting in person and having somebody there to answer the question instantly. So that's one thing we're trying and we are looking forward to seeing how this one goes.

DC Institute:

Do you think there needs to be more education at a younger age on saving for retirement?

Gay Lynn:

Yeah, that's been a topic for a lot of years in financial literacy and teaching from a young age in middle school, high school, and obviously in college because they really don't teach that. If you take a finance class, that's doesn’t really include personal finance. So I think that's very important and I am sure there are some big names in the industry trying to get that back in to the curriculum at schools but I don’t think it’s really taken off.

“If you can do it, you should do it.”

DC Institute:

What are the three things plan sponsors should be doing to improve their employee participation?  

Gay Lynn:

  1. Finding the right way to communicate the plan is obviously number one, and I'm not sure I'm there yet, but making sure people are aware that it exists.
  2. Making the plan as attractive as possible, and that means having good investments, good oversight, low fees, and then making enrollment easy. Because again, when you have to complete a paper form, most participants really don't like that. If you can do it where it's just filling out a few things online, I think that would be very helpful.
  3. Last and not least my auto enrollment plight is the last big one. If you can do it, you should do it.


DC Institute:

What is the best advice you've received regarding your role and your plan?

Gay Lynn:

Well, I think some of the best information I get, and the best advice, usually comes from attending a conference and learning and hearing that somebody is doing something that's really innovative or, hearing someone you know that is very knowledgeable and has been in the business a long time too.

There are a couple of things that I learned and I remember taking them back to the office; putting in an investment policy statement. When I was in Idaho, we didn't have one and I remember the speaker saying, the first thing you need do when you get back to work is implement an investment policy statement if you don’t have one, which of course is very important.  I worked with a consultant and got one in place within a month. Also, if you're a fiduciary of the plan, knowing who all of the fiduciaries are and ensuring that the fiduciaries get the appropriate training and ensuring they understand their roles. Because, not only should they be willing to accept that responsibility, they also need to understand it.

I believe that is a very important thing. I've talked to people who don't think they're fiduciaries and they do the same job I do, and I don't understand why they don't think they're a fiduciary. We just had our consultants hold a fiduciary training for my staff and my investment committee.  It was roughly a five hour long training session, and when I was at your DC Half Moon Bay conference and talking about this with people, they were so surprised that it was five hours. It was worth the time.

My investment committee seemed engaged and I think they learned a lot. Lastly, I would say always remember that whatever you do for the plan, it's for the benefit of the participants. Not for me or to make my job easier and not for the record keepers or for anybody else. It's for the benefit of the participant.

DC Institute:

Gay Lynn, thank you so much for your time and considered thougths, the DC Institute appreciates all of your contributions and we wish you all the best of luck working to get the auto-enrollment into your plan. Form the enitre team, many thanks.

Author: Adam Grainger