By a razor-thin margin, the Connecticut senate approved a bill establishing a state-run retirement plan for private sector workers on April 30.
How razor-thin? The measure was deadlocked 18-18, mostly along party lines, with three Democrats joining the GOP minority in opposition. That required Lt. Gov. Nancy Wyman (D) to weigh in and break the tie.
The state’s House of Representatives approved the measure April 26 following a marathon 6-1/2 hour debate.
GOP Alternative Rejected
Republicans vigorously objected to the proposal, citing the new and, they claimed, costly state bureaucracy that would oversee the program. Senate Republicans offered an alternative earlier this year, a state-sponsored marketplace to connect small employers and their workers to private-sector retirement firms, similar to the alternative approved in both Washington State and New Jersey. The CT Post website reports that they offered the model as an amendment over the weekend, but it was defeated. A marketplace was one of three options outlined in an Interpretative Bulletin the Labor Department issued last November at the direction of President Obama.
State Comptroller Kevin Lembo, who co-chaired the Connecticut Retirement Security Board, said he thinks a private sector solution should be the first answer to this challenge, “but the market is currently failing to reach nearly half of our workforce,” according to CT NewsJunkie. He also noted, however, that a feasibility study conducted earlier suggested that approximately half of employers surveyed said that if such a program was implemented, they would go out into the private market for a solution.
Auto Enroll/Deferral with Opt Out
The retirement program would begin during the fiscal year that starts July 1, 2017. It would require employers with at least five workers that don’t already offer a workplace retirement plan option to set up an automatic payroll contribution deferral of 3% for their workers who are at least 19 and who earn at least $5,000 a year, once they have been employed for 120 days.
All eligible employees would be automatically enrolled in the program unless they opt out. They could opt out of the program on their own, or increase the deferral rate if they choose.
Payroll deductions would go into a Roth IRA overseen by a new authority, the Connecticut Retirement Security Authority, which would be permitted to charge a fee to participants to cover the costs of the program. If the bill is signed into law, the deductions are expected to begin in January 2018.
Next Steps
Senate President Pro Tem Martin M. Looney said there are some minor issues with the bill that still need to be resolved between the Democratic majority and Gov. Dannel P. Malloy (D), but he was optimistic this would be settled before the regular session ends at midnight on May 4, according to the Connecticut Mirror. Reportedly those issues “mainly” involve the vendor selection process for a fund investment manager.
How razor-thin? The measure was deadlocked 18-18, mostly along party lines, with three Democrats joining the GOP minority in opposition. That required Lt. Gov. Nancy Wyman (D) to weigh in and break the tie.
The state’s House of Representatives approved the measure April 26 following a marathon 6-1/2 hour debate.
GOP Alternative Rejected
Republicans vigorously objected to the proposal, citing the new and, they claimed, costly state bureaucracy that would oversee the program. Senate Republicans offered an alternative earlier this year, a state-sponsored marketplace to connect small employers and their workers to private-sector retirement firms, similar to the alternative approved in both Washington State and New Jersey. The CT Post website reports that they offered the model as an amendment over the weekend, but it was defeated. A marketplace was one of three options outlined in an Interpretative Bulletin the Labor Department issued last November at the direction of President Obama.
State Comptroller Kevin Lembo, who co-chaired the Connecticut Retirement Security Board, said he thinks a private sector solution should be the first answer to this challenge, “but the market is currently failing to reach nearly half of our workforce,” according to CT NewsJunkie. He also noted, however, that a feasibility study conducted earlier suggested that approximately half of employers surveyed said that if such a program was implemented, they would go out into the private market for a solution.
Auto Enroll/Deferral with Opt Out
The retirement program would begin during the fiscal year that starts July 1, 2017. It would require employers with at least five workers that don’t already offer a workplace retirement plan option to set up an automatic payroll contribution deferral of 3% for their workers who are at least 19 and who earn at least $5,000 a year, once they have been employed for 120 days.
All eligible employees would be automatically enrolled in the program unless they opt out. They could opt out of the program on their own, or increase the deferral rate if they choose.
Payroll deductions would go into a Roth IRA overseen by a new authority, the Connecticut Retirement Security Authority, which would be permitted to charge a fee to participants to cover the costs of the program. If the bill is signed into law, the deductions are expected to begin in January 2018.
Next Steps
Senate President Pro Tem Martin M. Looney said there are some minor issues with the bill that still need to be resolved between the Democratic majority and Gov. Dannel P. Malloy (D), but he was optimistic this would be settled before the regular session ends at midnight on May 4, according to the Connecticut Mirror. Reportedly those issues “mainly” involve the vendor selection process for a fund investment manager.
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