Connecticut Legislature Passes Legislation to Develop Public Retirement Plan for Private-Sector Workers
Largest Ever State-Level Investment In Creating a Public Retirement Savings Plan For Private Sector Workers Who Lack Access To Retirement Savings Plans at Work
Funds Will Support CT Retirement Security Board Charged with Conducting a Market Feasibility Study & Developing an Implementation Plan By 2016
HARTFORD — Members of the ‘Retirement for All CT’ Coalition declared victory Wednesday night as the Connecticut General Assembly announced it will invest $400,000 to lay the groundwork for the creation of a state-level public IRA plan, open to all private sector workers. The funds were approved in the FY 2014-2015 budget passed by legislators this past Saturday, May 3.
The funds mark the largest ever state-level investment in the creation of such a plan, with the ultimate goal of providing retirement security to the 740,000+ Connecticut workers currently not participating in an employer-based retirement savings plan — without imposing any additional cost on employers.
“This is an incredible moment as Connecticut has just catapulted into the national lead on this critical issue for working families,” said Sal Luciano, Executive Director of Council 4 AFSCME, the state’s largest public employee union. “By laying the groundwork for a public retirement savings option for all private-sector workers, Connecticut is making a serious, first-in-the-nation investment with the aim of developing an optimal plan for our state that will ensure the greatest possible return on workers’ savings. No other state has made such a serious commitment to addressing the retirement needs of those without access to employer-based retirement savings plans. This is progressive leadership at its finest, responding to the voices of the thousands across the state who have spoken up and urged their elected officials to address the retirement crisis.”
H.B. 5597, the state budget implementer passed Wednesday night by both chambers, establishes the Connecticut Retirement Security Board, within the State Comptroller’s office. The Board, comprised of employees, employers, investment experts, and representatives of the Governor’s office, is charged with developing a state-administered Public Retirement Plan. The plan must achieve several key objectives that are currently lacking in the retirement marketplace:
- Provide a guaranteed rate of return
- Universal access and portability
- Low-administrative costs
Click here to jump directly to the relevant pages 239-248 of the final implementer bill, see Secs. 180-185, beginning at Line 7479. Click here to read the Office of Legislative Research’s final analysis of the legislation.
In Connecticut, approximately 740,000 residents are not participating in an employer-provided retirement plan, according to a Schwartz Center for Economic Policy Analysis (SCEPA) study released last year. The ‘Retirement for All CT’ coalition has been pressing for the creation of a state-level retirement savings plan open to these workers since early February.
“Connecticut residents are grateful to the hard work of State Senate Majority Leader Martin Looney and State House Majority Leader Joe Aresimowicz who led the way in fighting for this issue.” said Bette Marafino, President of the Connecticut Alliance for Retired Americans. “The Connecticut Retirement Security Board will be tasked with developing the most effective way for our state to move forward in expanding access to low-cost, quality retirement savings vehicles for Connecticut’s workers. We’ve been saying all along that retirement shouldn’t be a gamble. And with this proposal, thankfully, it no longer will be.”
“I am elated that our lawmakers heard the call of the many thousands of Connecticut residents who, like me, lack access to an affordable retirement savings plan,” said Dorry Clay, a self-employed web designer from Stonington. “Like many workers, the recession hit me hard. I lost my job, and not long after that I was diagnosed with cancer, which wiped out my savings and added new debt. I endured my treatment with cancer, and worked to establish my own business, doing the creative work that I love. I shouldn’t have to work until I am 70 because I can’t afford to retire. Quality-of-life matters. Having a low-cost, easy to understand, and accessible retirement savings plan will be a big benefit for everyone across the state who is self-employed like me, as well as countless employees who aren’t provided an option like this through their employers.”
“We are thrilled our elected officials understood that when it came to retirement security, Connecticut had to act,” said Nora Duncan, State Director, AARP Connecticut. ”If older adults do not have enough money for a secure retirement, they will rely more heavily on public assistance. By investing up front in the design of the plan, Connecticut will allow more of its citizens the opportunity to save for their future, and the state will ultimately save money.”
The Board, chaired by the State Treasurer and State Comptroller, is expected to report back to the General Assembly their findings and a plan for implementation by 2016. Funding included in the state budget is expected to be used to hire the necessary consultants and staff to ensure the Public Retirement Plan will be self-sufficient and compliant with all federal regulations.
“Tonight, the Legislature has chosen to take a strong stand for Connecticut’s workers,” said Lindsay Farrell, Executive Director, Connecticut Working Families. “Lobbyists for the big banks and financial institutions worked hard to kill this idea. Connecticut’s leaders chose to tune them out, putting workers and small businesses ahead of Wall Street bankers by laying the groundwork for a public retirement savings option. Now our state is poised to become a national leader in addressing the retirement crisis.”
“Private sector businesses have failed to deliver retirement security for all. Nothing they say can make those numbers — 740,000 without access to a retirement savings plan at work — go away,” said Lori Pelletier, Executive Secretary-Treasurer of the CT AFL-CIO added. “By laying the groundwork for a Public Retirement Plan open to all private sector workers, the Legislature has sent a powerful signal that it will no longer let this crisis continue.”