Praise and criticism has followed House passage of a bill that would create a state-run retirement-savings program serving nearly 600,000 private-sector workers in Connecticut who currently lack access to workplace-based retirement savings.
The bill, An Act Creating the Connecticut Retirement Security Program, passed 76 to 63 with 11 members absent for the vote that took place just before 3 a.m. Tuesday. It now goes to the Senate for consideration
State Comptroller Kevin Lembo said the legislation, which he has championed, would create a new quasi-public entity responsible for implementing a retirement-savings program through contracts with private-sector providers. The proposed program would not be mandatory for businesses that currently already offer a 401k plan or other workplace-based savings option to its employees.
It also would not require that participating employers contribute to the program (only that they provide a payroll deduction mechanism for employees to contribute); and employee participation would be strictly voluntary (they would be automatically enrolled, but can opt out if they prefer).
“The goal is not to compete with or replace the private market, but to fulfill a significant unmet need in the market that must be answered for the sake of those families and our entire state economy,” Lembo said in a statement.
Andrew Markowski, state director for the National Federation of Independent Business, faulted the price tag associated with the legislation. He cited a study from early this year saying the fund would need no less than $1 billion to become financially solvent. He also said the program could easily become a mandate for business owners.
Markowski said, “Unfortunately instead of putting their energy into reducing the regulatory burden on small business, a majority of legislators in the House just decided to increase regulation even though the private sector is more than capable of assisting people with retirement planning.”
AARP’s Connecticut chapter director Nora Duncan said research from her organization proves people with payroll deduction retirement choices are 15 times more likely to save for their future. “We look forward to passage of the bill in the Senate and positive progress towards closing the huge gap between what our state residents have saved for retirement and what they need, leading to less reliance on social safety net services and costly Medicaid for our seniors,” she said today.
