Insights on modernization from New York City Board of Education Retirement System

Speaker A: Hi, I'm Jessica Hurley from Majesco and this is Future of Retirement. In this series I sit down with leaders across retirement pension and pensioners transfer to talk about what's changing across technology operations and the way we serve our members. Because the reality is there's a lot going on in this space right now. At eMagesco, we spend a lot of time thinking about what's next while staying grounded in what organizations need to execute today. So stay with us. You might just find your next now,

Speaker B: today we're going to talk about retirement administration transformation through two lenses. The experience of the major public retirement system that has been on this journey for years and the broader trends reshaping the retirement of retirement across the country. I'm very pleased to welcome Sandy Rich, Executive Director of New York City Board of Education Retirement System Organization, NYC Burrs. Sandy brings remarkable breadth of experience across public pensions, investment management, capital markets, corporate governance and cyber security. Over the course of his career he served as an investment banker, portfolio manager, corporate director, audit, uh, committee chair, as well as senior executive both in public and private sectors and outside of that very accomplished professional life. Sandy is also an amateur underwater photographer, which may be a topic for entirely different podcasts. Sandy, welcome. It's great to have you with us.

Speaker C: Thank you, Jessica.

Speaker B: Thanks. I'm also delighted to welcome Dan Dunan, Executive Director of National Institute of Retirement security. Dan brings 25 years experience working on retirement issues from a number of different perspectives, including an analyst, consultant, educator and plan trustee at ners. Dan leads the organization's research, education and strategic initiatives and has authored or co authored more than 30 reports on retirement policies. He's also a frequent speaker, media resource and trusted voice on what it takes to build resilient and financially secure retirement systems for Americans. Welcome Dan.

Speaker D: Thank you for having me.

Speaker B: Great. So let's start. What I'm particularly looking forward to today is just bringing these two perspectives together. Sandy, you can take us inside the transformation of a major retirement system here in New York. While Dan, you can give us the broader view of, uh, those experiences and tell us about the future of retirement administration more broadly. So Sandy, let's start with burs. First, just a quick introduction for those of you who may not be familiar with the organization. Could you start by introducing New York City burs who, who uh, you serve and the role the organization plays within the New York City's retirement system?

Speaker C: Sure. So New York City Board of Ed Retirement System actually protects the retirement security 55,000, uh, non pedagogue employees of the Department of Education in New York City. We are one of the five retirement systems in New York City. Those five include NICERs for general employees, teachers retirement for UFT, union teachers, fire, police and birds. We are somewhat unique. Uh, we are 105 years old. Uh, we're one of the few retirement systems in the country that provides retirement benefits to part time employees. Most of our uh members are part time such as uh, kitchen help, um, advisors, crossing guards in the, in the New York City school system. Brrs uh, has as I said been around for 105 years. Um, and uh, we are a creation of uh, the state and that actually is also a distinction among the four other systems. In aggregate the five systems are approximately $400 billion. We are almost $12 billion in assets. Uh, we have very uh, strong investment performance. We have a target return of 7% and we have compounded far ahead of that. And we are overfunded. We are over 100% funded on an actuarial basis and a little bit more on a mark to market basis for all those actuaries out there who are listening.

Speaker B: Terrific. Dan, can you give us a little background on your organization? Nurse?

Speaker D: Sure. The National Institute on Retirement Security is a nonprofit, uh, nonpartisan research organization. We have not been around 105 years yet, but we have been around since 2007 and really we try to produce research that you know, helps move the dialogue forward in terms of retirement security. So that might be, you know, how are people doing, saving for retirement, preparing for retirement, looking at net worth compared to, you know, where they should be in their financial situation. Right. And that varies obviously on age. We look at the economic impact of pension dollars for across the country and in states and we're a membership organization because the generosity of um, our members, we are able to do the work we do and really just put everything out freely available for everyone. So in addition to our research we do webinars and we just started our own podcast and we hope to you know, have a wide range of v is there to come in and talk about, you know, their part of retirement and how we can do things better in this country.

Speaker B: Terrific, thanks. So Sandy, back to you. When Burs originally began thinking about kind m of the modernization journey, if you will, what were you trying to accomplish and what were some of the challenges you were facing at the time? Perhaps equally important, what are the opportunities did you see fundamentally improve the way the organization operated and served its members?

Speaker C: So I've been executive director for almost 11 years. I came to Burrs in the middle of the process of transitioning from their old established 50 year old mainframe system to uh, V3, which was at the time Vitek, now Majesco. Um, in May 2017 we went live with the new system off premises and not Vitek's fault, but with some significant deficiencies in our expectations for the system. We probably went live. We went live with probably 80%, 85% of the expected capabilities of the system. But it was a very significant change for our organization. Uh, we previously had not managed, uh, payroll data files, uploads to systems that was handled by our previous outside provider credentials who basically was about to fire us because their product was end of life. We were the last customer and it took us a while to extract ourselves. We had to stand up significant data processing capabilities internally, which we had relied completely on Prudential for. So there was a lot of staff increases, there was a lot of staff retraining and there was a significant amount of toilet scramble at the end. When we went live May 2017, there were a lot of workarounds related to a historic inability of uh, BURS as an organization to understand all the complexities of their operations and translate those into systems descriptions. So we had a uh, we had some transition to manage through after May 2017.

Speaker B: Curious Dan, do you have any thoughts on journeys you've seen how they may differ from Sandy's experience?

Speaker D: Well, I was going to ask Sandy, you know, you went on this journey and I mean this is a significant transformation from a system that was 50 years old, right? How, how has your needs and priorities evolved over time?

Speaker C: So when we uh, when we went live in 2017, we had a long list of repairs and improvements we wanted to make in the system. That was followed on by changes that were available to us from secure 2.0, including adding M. Roth to our uh, available benefits to members. In that, in that interim between 2017 and say 2023, we actually worked with Viteknow Majesco to actually remediate the deficiencies in the system that we went live with in 2017. We went off premises. We went, we jumped directly to their Velocity project and we were one of the few, one of the first uh, to make that leap. And in that leap, um, we actually had managed to be able to improve our budget profile because off premises was more economic for us. We gave up a lot of the servers, we gave up a lot of the risk of managing that hardware and the risks around it, including maintenance, including cybersecurity, by going to AWS with Velocity. So you know, in the last uh, Say nine years. We have added processing capability, we have added Roth as an option for our members. Uh, we operate, uh, both a defined benefit and a defined contribution sidecar, all managed through Velocity. We implemented call center, call center integration, something new for BRRs. We had previously not had a call center and that is integrated into the system. We integrated outreach through the campaigns, uh, functionality that uh, the product, and we refer to the product as CPMs, um, and we had to manage during that period significant outreach burden. Because one of the historic features of the Board of Education Retirement system, it is not auto enroll historically. Historically it is the only system in New York City which is not auto enrollment. So when we actually got control of all the data May 2017, and we could track all the data from payroll into our system, we could identify over 20,000 staff members of the DOE who were not enrolled in our system. So one of the reasons we went to the campaign's offering from vitec, uh, and Majesco is we realized we have to target these people because they are leaving behind an extraordinarily attractive benefit. Now we launched that campaigns effort and also in cooperation with our union, where we work very closely with our unions, we began an effort in Albany to change our laws to make us a auto enrolled system. That actually occurred two and a half years ago. After two years of working with Albany, we finally got it passed, finally got the governor to sign it. And On November, uh, 2025 we went from basically 35,000 members to 55,000 members overnight because we auto enrolled everyone not enrolled in the system and we will continuously auto enroll every employee going forward. It was an extraordinarily important change and I would put that kind of as the primary advantage that actually we were able to employ. And then to give some credit to um, Majesco and Vitek, um, we were among the first to implement Roth. Uh, so we've had Roth availability to our DC contributors for uh, contributions for over two years. We did it almost immediately and conversions went live this year. So they can convert existing contributions in a DC program. Because we have of the $12 billion, approximately $12 billion of assets we manage, a, uh, little over 4 billion of that is our Sidecar DC program.

Speaker B: Yeah, absolutely. Dan, I'm curious as you, as you listen to Sandy's uh, uh, answer to your question, you've seen retirement organizations navigate these kinds of transformations and a lot of different vantage points, right? So is the evolution something that you see more broadly, where organizations may begin a modernization journey focused on solving a particular technology operational challenge, but then Their priorities exp. Expand or change over time. Um, what have you seen organizations learn about themselves as they move further along that journey?

Speaker D: Yeah, I think this space is moving really quickly. Right. I think what was done 10 years ago is new systems now are doing a lot more than that. So, um, it feels like you go through this big journey and I think like the BERS system, um, some of these systems hadn't been done for a very long time updated, but we're now starting to see the bigger systems doing another update to get more functionality. One of the things I always hear about, and I wanted to ask about, um, Sandy's experience there. It seems like there's a human component to this too. With your team. You know, they've been doing things the same way for a long time and you know, the new system is going to be a lot better, but it also takes a lot to get there. I, uh, wonder how your team sort of responded to the need to do this. Were they excited or mixed bag, which I think is kind of normal.

Speaker C: Decided. Mixed bag. Dan, There were, We had, we had some in the leadership team who thought it wasn't worth it to do it actually. He was the head of hr and uh, I pressured him to retire and it was one of my first acts because he was standing in the way. It is, it is remarkable to see the changes though. Um, among the other things which happened as a result of this new system changeover is when I, when I started ten and a half years ago, there were complaints about backlogs, overwhelming work burdens, but no information about that. So, you know, when I asked, oh, okay, well, uh, what is the backlog? Give me the data. Uh, well, uh, look at that pile of papers. Yeah, that was about it. We implemented trackers. Uh, we, we, we have a full component in CPMS in the system which tracks activity. We, uh, implemented, uh, remote desktop, actually, luckily before COVID hit, uh, which tracks every keystroke and uh, we had already empowered most of our staff to have independent phone service, mobile phone service and ah, because we were running some remote folks, um, we can tweak, tweak and track keystrokes. We can track work on the phone and we get a monthly report by individual, by department. And there was, you know, in addition to the fear of the system, there was some, you know, concern about the idea of, uh, Overwatch. You know, someone's watching me. Uh, but you know, the reality is we found someone who wasn't doing any work, who was watching Netflix on their phone. We fired them and the rest of the staff said, oh, look at that. And we never heard another thing about it. And uh, we. Fine, we run a, we run a, uh, standard three days in the week. Three days a week in the office during regular hours. We're very aggressive in the summer, uh, with remote work. There's not many people out here today. Um, and the reason we do that is we have the data to show anyone to prove people are more productive when they're not here. It is remarkable. And it is significant. It's statistically significant.

Speaker B: Wow.

Speaker C: And the system supports all that.

Speaker B: That's terrific.

Speaker C: It keeps people happier. It's remarkable. It's remarkable how big a smile you get when you offer someone a job and say, you know, you gotta be here five days a week while you're training, but once you're trained and your manager thinks you're ready, you have a three day a week in the office and we'll let you choose those days.

Speaker B: Wow, that's really helpful. It's quite an, it's quite an evolution that you guys have gone through. You know, it's, uh. Everybody thinks that modernization is all about swapping out, you know, getting, moving to a cloud system or everything else. But what you've just touched on is modernization is more than that. It's, it's, it's transformational across the, across the company itself. Employees are involved in everything else.

Speaker C: It opens, um, up options, Jessica. Uh, it really does.

Speaker B: Yeah, it does.

Speaker C: And we're, we're still advancing with change and finding additional options. You know, I'm looking forward to majestic ability to introduce artificial intelligence in, uh, what we do because we are pressured. We are pressured as a result of auto enrollment. Our, uh, you know, our staff is up about 15% from the day of auto enrollment, yet our transaction volume is expected to grow between 45 and 50% over the next year or two. And that's going to be a significant burden on us. We need to hire a lot more people or get a lot more efficient or both.

Speaker B: So let's pivot to, you know, we talked about this evolution. Let's pivot to, uh, agility. Right? So kind of the, your ability to, to evolve, but also kind of adapt. Um, the public retirement system has to operate within a very complex environment, which you've articulated a little bit about. Uh, there's legislative changes, there's policy changes, there's new service expectations and changing workforce needs as we just talk about. And then there's increasingly high expectations around digital access and responsiveness. Um, New York City burs has had to adapt to all of these things. And I'm curious, how has the Velocity platform, uh, along with a partnership with Majesco helped give BRRS the flexibility to respond to change without constantly having to reinvent the underlying administrative environment?

Speaker C: Well, so it was a trial by fire, um, with the initial transition from Peru, uh to Majesco Vitek, um, and we found, we were found two large problems. One, um, we didn't actually underst or the then system did not actually understand what was happening in operation. It didn't really understand. And two, we didn't have the internal expertise to manage an IT project like the one we were pursuing now. The going live in May 2017 was a trigger point for us to significantly recast our internal staff. Uh, we, you know, in kind of the period between when I started, which was January 2016 and going live May 2017, we surged staff into the project. Both operational experts and whatever you know, call it, I wouldn't call it IT management expertise, just smart people who knew what a computer was and could be responsive. Search them into the project. That period developed. We identified a couple of key, key people, uh, who then became project managers for the future of that system. That beginning kind of June 2017 took control over remediating deficiencies and planning for the future. We have seen some turnover in those staff so we keep refreshing that team and that team has a tendency to pull in subject matter experts from around the organization as they attack specific projects or, or specific ticket issues around the system. Um, but when, when it came to moving from our initial on premises install which was deficient to Velocity which we are now off prem and significant more capability, that team was instrumental in getting it done. So our initial May 2017 project came in 80, 80% of the expectation and over budget. Velocity was 100 of expectation and under budget. The transition was remarkable. And to be honest, Majesco Vitek wasn't the problem in May 2017 it was Burs and I give birth people the credit for you know, working with the Majesco team, bringing Velocity up right on time and under budget and uh, you know we continue to make improvements. Like I said, we've added campaigns and call center, you know, we can, we, we've added Roth, you know, we keep adding componentry and you know we actually have a functioning team which operates agilely with Majeska. And you know the only thing I worry about is keeping uh, that motor running.

Speaker A: Understood? Understood.

Speaker B: Dan, I'm kind of curious about your perspective on the broader scale. I mean how have you seen firms adapt modernization and to, to try to stay agile. Because what I've seen that's pretty consist that these, the different types of retirement systems always seem to be evolving and changing, taking on new, new colors, you know, direct contribution type of programs and things like that. How do you see agility being important to um, these plans?

Speaker D: Evolving? Yeah, I think the technology helps support a lot of this change. And I will tell you, in a prior role that I worked in, um, I wrote this, put together with coworker, a book outlining all the provisions, you know, discount rates, some things like that, basic stuff about all the education, um, pension plan characteristics of large education pension plans. And that was about 220 pages. And the original version that Nea had produced of that book was about 18 pages. Right. So all these plans are getting more tiers, more complicated. You know, it used to be the coal is 2%. Now it's the coal is 2% if this, and then if not, then it's something different. Right. The complexity and the design of the benefit, you know, the cost sharing and all these different things really gone up, up, up. And I think, you know, having the technology that can support and know these formulas allows us to administer that and really, you know, fine tune how these plans are run. But it's hard to overstate how much increase in complexity amongst these plans are because pretty much the same batch of plans, it just took a lot more space uh, to do that. And I think we saw that. You know, you mentioned the Roth transition and I know our friends that work with uh, folks on the Hill were really worried that the tax bill is going to require Roth to be set up and run next month. And some plans needed legislation to do that, some plans needed their systems updated and things like that. Um, and you kind of have to always remember outside, remind outside folks that there's processes for us to go through these public plans, um, to be able to do the things they want. And sometimes we need a little bit of an on ramp. You know, you need legislation to offer Roth in your plan and your legislature's out of session. You just can't turn around that quick, you know. Um, but yeah, I agree with the sentiment. You know, there has been a lot of changes. We saw a lot of those coming out of the Great Recession. Plans were changing everywhere. We're starting to see it go a little bit back in the other direction. Uh, but I would say much, much more modestly, M. Um, back in the other direction.

Speaker B: Yeah, makes sense. So Dan, why don't you lead us in the next question?

Speaker D: So, um, yeah, Sandy, I think, you know, when you look ahead to the future of New York City, Burrs, um, you know, you're focused on continuing to improve services, operational efficiency and continue down this road. One of the things I hear a lot of people talking about now is what is the role of AI? What is that going to look like? I feel like we're all talking about it and I only know of a few use cases. But, um, yeah, I think we're all over the map in terms of how we see this. It's going to solve everything or, you know, have a more modest role. I just wanted to get your take on that.

Speaker C: So New York City, the last thing I read from New York City is they say, well, we're not going to use artificial intelligence. We don't trust it. That's kind of the mayor's office. Um, I can tell you that we have stood up a group internally. We have put governance in place to manage the process. We've actually contracted with a provider, uh, which gives, gives us access to some artificial intelligence tools that can be, uh, sandboxed and protected. Uh, we have approved internally some, uh, sample efforts to utilize this tool that don't include any, um, PII for any of our members. We're actually separating that. So we're looking at where we can use it in fiscal operations, where we operate netsuite. We're looking at, uh, we actually utilize it in our, our asset liability and cash flow analysis. I've got a small team that works for me that does that internally, uh, for us because we're managing a pretty significant negative cash flow. Even though we're over, we're over, um, funded. We have very significant negative cash flows as a result of being upside down. And contributions, because we're overfunded, contributions are going down. Right? So there may be, in 2030, there may be zero city contributions to our fund after getting like 300 million or more a year every year. So, you know, these are issues we have to manage in terms of where I think it'll be most impactful. I'm going to look to Majesco. Um, to be honest, I'm looking at Majesco. I'm looking forward to the conference coming up in a couple of months. You know, I've got some history with Majesco on the insurance side. And uh, you know, if you look at, if you look at your website, Jessica, you talk a lot about artificial intelligence applications in your system. That's, that's really where we expect the most impact to come from. Third Party provider, um, Majesco through Velocity, Netsuite in our fiscal operations, Cisco in our call center operations. I mean, these are, these are people who have significantly more resources than us and more capital committed. And if they screw it up, you know, they are. The deep pockets will come after.

Speaker B: Exactly.

Speaker D: Can I follow up? You mentioned something like, you know, you can say we don't use it. I was warned and I've heard this warning given to others. You can say we don't use it doesn't mean your team doesn't use it. And maybe you need to have a policy. Does that sound right?

Speaker C: Yes, which is why we have a policy.

Speaker B: Thanks. Um, so earlier in the conversation you were talking about, you know, your relationship with Prudential and the, uh, importance of data and how important it is to, for clean data. One truth, if you will. Um, you touched on this earlier. So, you know, AI depends on it, obviously. Automation depends on it. Member self service depends on data. Ultimately, the quality of many decisions in any organization really kind of depends on data. How does having clean, accurate, reliable data translate into a better experience for the member? And on the other side of the equation, what does better data mean for BRRs operationally in terms of efficiency, accuracy, and the ability of your staff to focus on higher value work?

Speaker C: So you just threw me back into a horrible nightmare and a chill. When we went live where we became in control of the data feed and took it away from the pru. Uh, what we found was, uh, the payroll Data that the PRU had accumulated over 40 years was littered with error littered, just horrible. Um, we launched, oh, I would say before we saw this problem coming, kind of three or four months before we went live. So we launched an effort to start cleaning up that data. We came face to face with the reality that it was economically impossible for us to go that far back and clean the data, uh, in an efficient, intelligent way. We stood up two new departments. One was to manage the feed, the new feed of data from the 36 payroll fees that we got. And some of them are Excel spreadsheets, some are, uh, data files. But that department, we call it quality assurance, basically cleans the data to bring it into the, into the system so that everything passed May 2017 is clean data. Now what's fascinating about that is that they don't have to correct data once. What happens is they identify an error and they have to re correct it. Every payroll, every payroll file, which is remarkably stupid. We've been cited by our auditor. Well, you should tell those 36 agencies to correct their Data. And we respond to our auditor and we tell them, well, we've been telling them that since 2017 and they haven't been able to do it, or they refuse to do it, or they don't care to do it, who knows? But they won't do it. So we have quality assurance. It's cleaning data as it comes in. And the list of corrections keeps getting longer. A great opportunity for artificial intelligence in my view. The other problem is historic data. We made an effort to clean it up, uh, electronically, very difficult because a lot of those records don't exist electronically. So we stood up another department and that department cleans data for people we expect to retire in the next three to six months. So kind of projecting who's coming to us to retire and focusing on those files and cleaning them. Uh, and until the last person who predates May 2017 retires, we're going to have a, you know, a data cleansing effort for historic data. So that department's probably going to be here for the next, oh, I would say at least 20 years until we can finally get to the point where all the data historically is clean. And it is extraordinarily important. When we found, when we found the level of errors, we started correcting some of these historic payment errors. And what is remarkable is it was always against the member. You would, you would think, you would think a random data error would have been normally distributed and you'd have some people who benefit from the correction, some people who are hurt. They were all benefited by the correction.

Speaker B: Interesting.

Speaker C: Yeah, interesting. It's kind of scary.

Speaker B: Yes. I'm curious, Dan, any thoughts, uh, about uh, data, uh, clean data? I mean obviously as a researcher, in your case it's all about, about the data, uh, your thoughts about the industry as a whole in terms of quality of data and how things have changed over time.

Speaker D: Yeah, I would uh, reemphasize. It's a lot harder to fix data that's incorrect once it's put in and allowed to hide amongst, uh, the other correct data. So, you know, having a good process, putting it in and not letting things slide early, I think it's going to save a lot on the back end.

Speaker B: That's great. That's actually a great place to kind of, of close because data is the uh, is the source of truth in every organization. But I still have one final question for you both. So I'd like to ask you both just if you could choose one word or a short phrase to describe the uh, future of retirement and pension administration, what would it Be and why we'll start Sandy with you.

Speaker C: So you know, I'll pull, I'll pull from our, our saying we provide financial security to our members. Security. All about security. I would add that. And this is extemporaneous and none related to your question, Jessica.

Speaker D: Okay.

Speaker C: Uh, one of the challenges of pension systems is they are not just a pool of assets that is managed. Most any magazine you read about pensions, they talk about all their investments. If you look at everything we do at Birds, we do everything but provide a credit card to our member. Disability retirement, death benefits, DC DB loan and access to current assets immediately. We are, are a commercial bank in all respects, a retail focused commercial bank in all respects except for credit card and it. And people need to think about the industry that way and understand that the systems that support such an institution have to be operated just like a commercial bank. Sorry, that wasn't one word.

Speaker B: No, no, that's fine. I did ask you why, uh, and that was good. Everything but the kitchen sink is your response.

Speaker C: Yeah, basically.

Speaker B: Dan, how about you?

Speaker D: Um, I would say evolution. I think when you look at what retirement systems have to do to invest, there are some differences in investment strategies, but they don't tend to be that wide. I think where people are on the journey of doing the pension administration systems, the resources they have to put into it, um, there's a pretty wide discrepancy there. And I think looking forward with AI and we don't know how that plugs in necessarily five, 10 years from now or really how good it gets. Um, I think there's just going to be a continuing evolution here. And you know, maybe as uh, these projects get a little simpler, some of the smaller plans are able to afford them and get in and get the benefits of this. But I think there's going to continue to be a lot of change in this space going forward. Just the technology just seems to be coming out really fast.

Speaker B: Yeah. Dan, something as, something occurred to me as you were mentioning this. We talked about, you know, kind of the Internet, the rise of the Internet. Um, I don't think I could have envisioned the Internet as it is today. Back when AOL was just handling my email. I could not have imagined this future. Um, and I don't think we can imagine where AI is going to take us. So it's both scary and exciting.

Speaker D: Yeah, I forget who. I heard someone say years ago, you used to want to hire someone whose brain was an encyclopedia. They just knew a lot of stuff. And with the Internet and all this information at your fingertips, you really want to have someone who just knows where to find things that's useful. Now, um, that always struck me as right.

Speaker B: That's terrific. Well, those are two great perspectives just to end on. I thank you guys both. Um, what I take away from this conversation is the modernization is becoming much broader than just technology alone. As we talked about earlier, it's about creating an organization that can adapt. It's about having that trusted data, more efficient operations and technology that allows people to respond to change rather than being constrained by it. And ultimately all of these, all of this comes back to the mission delivering better service and better retirement outcomes for people these organizations serve. Sandy, thank you for sharing the New York City Burrs story, uh, and some of the lessons you've learned along the way. And Dan, thank you for helping us connect that experience to the larger changes happening across the retirement landscape. And thank you everyone for listening. We appreciate you joining and we look forward to continuing the conversation about the future of retirement.

Speaker A: Thanks for joining me on Future of Retirement. If you found this conversation valuable, be sure to follow the series and ah, for more insights, join us@majesco.com ah, and from all of us here at Majesco, here's to shaping your next now.