The landmark Connecticut bill expected to address the future retirement challenges for private sector employees in the state has jumped its first legislative hurdle.
On March 18, Senate Bill 249, coined an act to promote retirement savings, has been approved by the Connecticut General Assemblys Labor and Public Employees Committee. A favorable 7-3 vote pushes the proposal to its next round of deliberations.
At press time, it was unclear when state legislators would next hear the proposal.
The legislative proposal to create a state-administered retirement savings plan for low-income private sector workers through payroll deductions was first introduced Feb. 21. The bill was previously presented in the 2013 legislative session.
Under the Connecticut Security Trust Funds plan, employers are not required to contribute to the hybrid employees 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 bills 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.
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 employees 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.
Previously, lawmakers in Maryland and Wisconsin introduced similar private sector employee retirement efforts that mirrored Californias 2012 mandate for employers to contribute 3% of workers 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, President Obamas introduction of myRa account, also a payroll deduction option, and Senator Tom Harkins (D-Iowa) USA Retirement Funds Act, which seeks to provide a pooled retirement vehicle for small businesses, demonstrate efforts for private retirement on the national stage.
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