WASHINGTON – The Pension Rights Center applauds the Connecticut General
Assembly for passing legislation that lays the groundwork for a new
state-administered retirement savings plan for private-sector workers who do not
have an employer-provided pension or retirement savings plan.
gI am proud of my home state for taking a
bold step toward expanding retirement coverage for millions of hard-working
Connecticut residents,h said Karen Friedman, the executive vice president and
policy director for the Pension Rights Center and a West Hartford native. gThis
plan is good for families and good for the economy. When people have adequate
income in retirement, they will continue to buy goods and services – which helps
keep local and state economies moving. Also, they are likely to be more
independent and need less support from social service agencies, which ultimately
saves the government money.h
The legislation, which passed on Wednesday as
part of a larger budget bill, provides $400,000 to start the process
of creating a new state-administered retirement savings plan, which would be
operated separately from the Connecticut public retirement system. The funding
establishes a 14-member Retirement Security Board that is charged with
conducting a market feasibility study for a new plan and developing an
implementation plan, all to be completed by April 1, 2016.
Working with a diverse range of stakeholders,
the Board will develop a low-fee, state-run Individual Retirement Account
program to which employees will automatically contribute via their employerfs
payroll deposit system, unless they opt out. The Board will also examine how to
establish a guarantee, backed by insurance, to ensure that workerfs savings will
continue to grow. The plan also provides that benefits will be paid out as a
lifetime stream of income so that people do not run out of money in
retirement.
Connecticut joins California in enacting legislation to lay the groundwork for
state-administered plans for private-sector workers. Massachusetts has also
passed a narrower bill to allow their state retirement system to run a savings
plan for employees of nonprofit organizations. Other states, including Illinois,
Maryland, and Minnesota, are considering legislation to expand retirement
coverage for private-sector workers. For more details, see our fact sheet.