Connecticut legislature deliberates private employee retiree options

Connecticut lawmakers are considering a new plan to offer individual retirement accounts to private sector employees in a need of future retirement assistance.

The Connecticut General Assembly’s Labor and Public Employees Committee is set to consider the legislative proposal to create a state-administered retirement savings plan for low-income private sector workers through payroll deductions. Senate Bill 249 was first introduced on Feb. 21. 

Under the Connecticut Security Trust Fund’s plan, employers are not required to contribute to the hybrid employee’s retirement plan, which incorporates defined benefit and defined contribution characteristics. According to the bill, qualified employers include organizations that staff five or more persons. Excluded employees include those currently receiving retirement benefits or are employed by the federal government, state and local governments or local municipality.

According to the Retirement for All CT Coalition, a joint group that includes local unions and employee associations that are pulling for the bill’s passage, the plan will likely lead to cost savings for Connecticut businesses because it will allow employers to hire and retain professionals that seek retirement benefits.  

Previously, lawmakers in Maryland and Wisconsin introduced similar private sector employee retirement efforts that mirrored California’s 2012 mandate for employers to contribute 3% of worker’s salary to a retirement account. Also, Maryland officials are considering a bill that requires employers with more than five employees to either provide a retirement plan or let workers have contributions to retirement accounts automatically deducted from their paychecks.

Similarly, on the national level, retirement options have been at the forefront of American policy points with President Obama’s introduction of “myRa” account, also a payroll deduction option, and Senator Tom Harkin’s (D-Iowa) USA Retirement Funds Act, which seeks to provide a pooled retirement vehicle for small businesses. 

Like Harkin’s proposal, which will promote the investment retirement fund to be overseen by a U.S. Department of Labor-approved independent board of trustees, the Connecticut Security Trust Fund Board will include appointments by the state’s elected officials. However, the state treasurer and comptroller will administer the plan.

Funding will be garnished from payroll deductions, but details are still being hammered out. The Connecticut bill says that the board will set a contribution level that will vary between 2% and 5% of the employee’s salary, based on the length of time they have contributed. Plan participants can change the level of contribution by petitioning to the board, according to the latest version of the bill.

The bill is set to be heard March 11 by the same legislative committee that introduced it. The bill was previously introduced in the 2013 legislative session.