State retirement plan proposal fails

(May 9, 2008) A proposal for a state-run, so-called universal retirement plan for small businesses failed when it didn’t come up for a vote in the House.

Not really “universal,” the proposal also failed to address the biggest barrier small businesses face in offering retirement plans. It also offered nothing that isn’t already available on the market, but would have spent more taxpayer dollars in the process.

The real barrier facing small businesses is the cost of employer contributions to retirement plans — and the affordability of participation — not the administrative costs, as some claimed (and which, in fact, are nominal).

The proposal was, however, a distraction away from efforts to improve Connecticut’s economy, and another attempt to bring state government into competition with the private sector.

Helping Connecticut’s economy stay on track and positioned for growth in the midst of a slowdown was a major theme when the session opened in February. But by session’s end, many positive proposals failed to gain approval, some because they would have required additional state spending.

These included a proposal that would have created a task force to study how the state can reduce or streamline state regulations on small businesses. Small businesses are incubators for economic growth and have been unnecessarily burdened with too many regulations that inhibit their ability to grow.

Another proposal would have helped determine if a tax credit program could be created to encourage investment in emerging industries that hold the greatest promise of job creation and business growth.

Because of the state’s fiscal pressures, there was little legislative progress in increasing funding for incumbent worker training or education. However, the needs remain, because of Connecticut’s shortage of skilled workers and its aging employee demographics.

For more information, contact CBIA’s Jesmin Basanti at 860-244-1929 or jesmin.basanti@cbia.com.