SB-652:
State 401(k) proposal offers no advantages

Status: Senate has approved; awaiting action by the House

(May 2, 2008) SB-652 allows the state to create and administer 401(k) plans for small businesses.

SB-652 is harmful because it:

Costs taxpayers $500,000 in the first year and likely will incur additional ongoing state costs.

Doesn’t significantly reduce costs for small businesses, as proponents say. 401(k) administrative fees are already nominal; this “pool” would have a small effect on a small charge.

Potentially opens the state to liability if financial products offered within the plan perform poorly.

Raises too many unanswered questions, such as what will the state’s real set-up and ongoing administrative costs be, and who will pay for them? Why have other states avoided this type of program?

Unnecessarily competes with Connecticut’s financial services industry, which already markets a wide range of retirement products to small businesses.

SB-652 should be rejected because it creates a costly government program and doesn’t offer anything that isn’t already available in the marketplace.