This newspiece is generously supported by Newton Investment Management
RETIREMENT SECURITY MATTERS
A forum for retirement innovation information sharing focused on
states, supporters, and service providers.
Vol 44 | December 16, 2021
Cha-cha-cha Me a Tontine Please: Or, just throw me in the longevity pool
Richard Fullmer and Manuel Garcia-Huitron
Nuovalo Ltd.
Nothing beats a dynamic duo when it’s time to tackle retirement income and risk sharing! We love our conversation with Richard Fullmer and Manual Garcia-Huitron, co-founders of Nuovalo. Do you like retirement income? We do! But sorting it out is tricky. So what if you maximized your payout by pooling your longevity risk with other people and someone else figured out how much you should be paid every year? Enter Fullmer and Garcia. Their firm delivers mezzanine-level computational software and services to asset managers and funds who want to provide these services to their retirees. This is new. Let’s go a little deeper.

Gentlemen – we love to start with bios. Tell us about yourselves!

Richard Fullmer: Prior to founding Nuovalo I focused on asset allocation and liability-driven investing as a portfolio strategist. I will admit that I started my career reluctantly in the insurance industry. It's the first and only job I could get out of college in the early 1980s! It turns out I loved the work. I stayed in the insurance industry for 13 years doing actuarial work and then transitioned to the investment products arena.

Manuel Garcia: I was lucky to get my start when pension reform was happening in Mexico. In 1997 I was a student at ITAM -- Instituto Tecnológico Autónomo de México -- a well-known Mexican university. My professor and mentor, Javier Beristain, was named CEO of the newly created pension fund, Afore XXI – which eventually became the largest pension fund asset manager in Mexico. He invited me to join him, and I fell in love with this pensions topic. After stints in the US, Netherlands, and back in Mexico, I am now working here in Chile.

PS these guys have the best bios and are deeply credentialled. We are embarrassed at what we’ve had to cut in the interest of space. Please see more on Richard here, and on Manuel here.

Richard and Manuel, you have an interesting new venture underway. Is this concept you are working related to the tontine idea we know and love?

RF: So you bring out the T-word!

Let's just toss that around.

RF: The answer is yes. We prefer the qualified term “tontine principle” to differentiate that we are talking about this principle of longevity risk-sharing, but in a modernized form compared to tontine products of the past. In practice, these arrangements go by a variety of names – we typically use “longevity pools” or “life pools,” but we also like “dynamic pension pools,” which was coined by researchers in Canada recently. Most people think of such arrangements as a closed-end pool of investors, but an issue with this is that the size of the group declines over time as people die, meaning that the pool becomes less and less diversified over time.

Open-end pools are more interesting, in that they can go forever as new people continually join the pool. The idea here is that people want a steady lifetime income that starts at a reasonable level and can increase over time, with diversification that remains strong throughout. And by pooling your risk with others, you earn not only investment returns but also longevity credits that grow over time for as long as you live.

This isn’t very common in the US – what’s your role in this arena?

MG: You’re right – it’s here, but it’s not common yet. Think of us as an enabler. We are a B2B company providing financial technology to financial institutions, governments, … [if you’re interested in a new idea in the retirement income space, read on HERE for more.]
Richard Fullmer and Manuel Garcia, we appreciate your innovative thinking about lifetime income. Want more? You can connect directly with Richard and Manuel by email. You can follow Nuovalo’s work at www.nuovalo.com. You can also connect with Richard and Manuel on Twitter at https://twitter.com/nuovalo.
*Fresh!* State Auto IRA Program Metrics
Breaking it down: Here’s the freshest data from the states.

What we see: Funded accounts are now over 418,000 – up about 60% year to date. Assets are at $375 million, 2.3x where we started the 2021 year. (Just one of many good things that happened this year, we will say). Average account balances are near $900. Oregon’s average account balance is $1,250. Long term account balances in all three programs are significantly higher. We continue to see opt out rates ticking very gradually downward, and average savings rates, aided by auto-escalation, ticking upward. Not shown in this chart, Oregon’s current average savings rate is 5.5% while Illinois and California are at 5.05% and 5.02%, respectively.

Across the three programs more than 44,000 employers are now registered to facilitate. 17,182 have begun facilitating, and the balance are working their way through the notification and first deduction process.
State Facilitated Retirement Programs - Fresh Highlights
I M P L E M E N T I N G
California (workforce 17.9 million) –The CalSavers Board met on December 13, 2021. The agenda included 2021 Q3 reports on program participation, funding, risk and investment performance. Also included on the agenda was a presentation of a report by AKF Consulting on the current landscape of state-facilitated retirement programs. Among program highlights included in Executive Director Katie Selenski’s report: during calendar year 2021 saver assets grew five-fold, the number of savers more than doubled, and the number of registered employers tripled. The program is also engaging in employer compliance activity, distributing due processes notices for employers who have either missed the registration deadline, failed to upload their roster data, or failed to execute payroll deductions. First due process notices were sent to 1,436 employers on September 2. In the interim more than 500 employers have executed on their requirements or resolved status-related questions. 
Connecticut (workforce 1.6 million) – Comptroller Kevin Lembo announced in a news release on Friday, December 10, 2021 that he “will be resigning his position due to an ongoing medical condition, effective December 31, 2021.” Natalie Braswell, currently the chief of planning, legal and regulatory affairs at the Connecticut Department of Energy and Environmental Protection, has been appointed by Governor Ned Lamont to complete the remainder of Lembo’s term. Ms. Braswell served as general counsel and assistant comptroller in the Office of the State Comptroller from 2011 to March 2021, including as a board member of the Connecticut Retirement Security Authority. Massena Associates wishes Comptroller Lembo well and appreciates the work he has done for the people of the state of Connecticut and for his significant contributions to a national movement to increase retirement security for all. From the bottom of our hearts, thank ❤ you. 
New Jersey (workforce 4 million) – New Jersey’s new retirement savings program board met for the first time today – details to follow. Raising awareness, NJ Spotlight News recently held a roundtable on the program featuring four panelists and including David John of AARP.
New Mexico (workforce 1 million) – The New Mexico Work & $ave Board met on December 2, 2021. The agenda included a report from the Executive Director covering an agreement to include New Mexico partnership-related deliverables in the scope of work for Colorado’s contract with AKF consulting, a Request for Information for the New Mexico Marketplace and a draft concept for 2022 legislation.
Virginia (workforce 4.3 million) – The Virginia529 Retirement Advisory Committee met Tuesday, December 7 to progress its planning for program procurements and implementation.
A C T I V E
Pennsylvania (workforce 6.3 million) - on Monday of this week Treasurer Stacy Garrity and Representative Tracy Pennycuick of Pennsylvania announced the introduction of the Keystone Saves Retirement Program (legislation pending). You can view the bill event here. Here’s a great place to stay informed. 
Hawaii (workforce 655,000) - Hawaii is one of the states completing Task Force work in 2021. We had a chance to talk retirement security with KITV reporter Diane Ako this past week. Watch this space for the Task Force report, publishing shortly.
C O M I N G U P

Connecticut (workforce 1.6 million) – The next meeting of the Connecticut Retirement Security Authority is scheduled for December 17, 2021.

2022 Initial Calendars:
  • CalSavers – January date to be determined, and February 28, 2022
  • Colorado – next meeting the week of January 4, 2022
  • Illinois – February 2022
  • Oregon – February 15, 2022
The Tale of the Three Little P's (Public-Private Partnerships)
I first stepped into the world of public-private partnerships twenty years ago at the New York City Department of Parks & Recreation, where we were busy experimenting with various different models of working with the private sector. Public-private partnerships are nothing new; just think of the government-backed Dutch East India Company, the first formally listed public company, but they continue to be an area of rich experimentation for governments to find novel solutions to advance the public interest.

Some of the partnerships for NYC Parks worked out well, like the agreement between the City and the Central Park Conservancy to manage Central Park. You can easily argue that the partnership saved the crown jewel of city, and it is a model governments still try to replicate all over the world to this day. 

Other partnerships turned into spectacular failures and never-ending sagas.
[What? No!] …
I think some of the success of these programs is due to the fact that the folks involved in developing them took the time to question each part of the model and figure out what the right solutions were for their specific needs. 

Which partner is responsible for which functions? The answer really depends on the strengths and weaknesses of each. Success for public-private partnerships is truly a balancing act, and like all partnerships, requires constant reevaluation and adjustment over time. 

More to come! / Joel
Columnist and Senior Associate Joel Metlen is based in Oregon. Joel is a pioneer of the state facilitated retirement savings space, woven into a career of public service and innovation. At OregonSaves, Joel’s responsibilities ranged from marketing and employer engagement to operations and data analysis. You’ll see his insights from that experience, and more, here.
Hot Sauce! Cool Stuff.
We recently had a chance to sit in on Pew’s presentation covering nontraditional workers and workplace retirement options with Alison Shelton and John Scott and we thought you’d like it too. Some good stats and analysis and one key takeaway that struck us: Multiple, innovative savings solutions will likely be needed to help very different types of nontraditional workers save for retirement. State-facilitated auto-IRA programs, which enroll private sector workers in a savings plan when they do not have a workplace plan, are one potential solution that could be adapted to reach nontraditional workers. Other possible approaches could include encouraging savings through the tax system or through a financial institution or financial technology (“fintech”) apps that help automate retirement savings transactions.

Men friends, do you need another reason to retire? We like this one, brought to our attention by the team at the Center for Retirement Research, Boston College based on original research by the University of Wisconsin-Madison.

It’s no miracle. From our good friend Grant, always on the lookout. The clergy may have security for the afterlife, but what about for their lives after work?
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Traditionally, Catholic sisters, brothers and religious order priests served for small stipends that did not include retirement benefits. Today, hundreds of religious communities lack sufficient retirement savings. COVID-19 has compounded this already difficult situation. A special collection is scheduled to be held during all Masses in Maine churches for the Retirement Fund for Religious. The fund benefits more than 30,000 elderly Catholic sisters, brothers and religious order priests. Last year, the Diocese of Portland donated $68,865 to the collection.
CentralMaine.com – Dec. 8, 2021
And, we are back on the presidential bandwagon! This week it’s William McKinley, brought to us by Scott Miller in The President and the Assassin: McKinley, Terror, and Empire at the Dawn of the American Century. We don’t mind admitting we did not recall that McKinley was assassinated. Spoiler alert, that’s how this book is going to start -- and end. In the middle we’re getting a whirlwind tour through the civil war, early Ohio, and the Gilded Age on our way to the presidency.
… PIX! Here comes the sun ...
In the spirit of the season, we are focusing on the family this week.

Manuel’s pandemic silver lining? Family breakfast on the terrace every day during lockdown time in Chile, with a fantastic view of the Andes mountains and a green park. “That expansive view helped a lot during these difficult times,” he shares.
And there’s nothing as fun as giving your family a chance to watch you do this:
Lordy -- from the top of the 120 meter ski jump in Lake Placid. What a great view! But our heart is stopping just looking at it. Thank you for sharing the moment, Richard!
 
In a gentler setting, if you ever have a chance to enjoy high tea at a fancy hotel with your mother, you should do it.
Even if you are wearing a hoodie and a swimsuit. She doesn’t care.
And if you have a chance to enjoy this view with your mother, you should do it. What are you waiting for? Get on it!

If you are willing to put real clothes on and get some work done, you may have an opportunity to meet this esteemed gentleman, the Honorable David Ige, Governor, State of Hawai`i, accompanied by Keali`ilalanikulani Lopez, State Advocacy Director, AARP Hawai`i.
That’s it for this edition! ❤ Hug your people and change the world.
If you like this piece, please stick with us. We’ll be back in about two weeks. If you don’t like it, please unsubscribe below. Comments for us? Please let us know. Want your own subscription? Request one here. All information shared is from public sources or used with express permission.
Massena Associates provides process, policy, and implementation consulting on retirement savings programs and products.

Our clientele includes states, governments, policy organizations, and private sector providers. Our specialty – efficient, targeted results. We are an active speaker on retirement security topics, including state-facilitated programs, MEPs and more.

If you’d like to explore working together, we welcome the conversation. Connect with us here, and at 339-236-0684.
RESOURCES you can use:
Looking for a great retirement savings innovation resource? Led by Dr. Alicia Munnell, the Center for Retirement Research at Boston College develops and hosts terrific content and proprietary research related to states, financial security, social security, and more.

The Georgetown Center for Retirement Initiatives, Exec Angela Antonelli, provides excellent information on state-based and other retirement security innovation and policy.

Pew’s Retirement Savings Project studies the challenges and opportunities for increasing retirement savings and is another great resource - check out the work of John Scott and his terrific team.

If you want a great source of broad-based, consumer-focused retirement news, Jeffrey H. Snyder’s The Morning Pulse is your ticket. You can subscribe here.