Senate Approves State-Run Retirement Plan Changes

The Senate approved legislation April 30 that imposes penalties on employers for not complying with the requirements of the state-run retirement plan.

SB 136, which passed on a 24-12 party line vote, makes a series of changes to the MyCTSavings program, which launched in May, 2022.

Employers with five or more employees—each paid a minimum of $5,000 in the calendar year—are required to join MyCTSavings if they don’t offer a qualified employer-sponsored retirement plan.

Businesses that offer employees a qualified retirement savings option should certify their exemption from the program, which is administered by the Office of the State Comptroller.

Eligible employees are automatically enrolled in the program, with employers required to remit employee plan contributions to the state. Once enrolled, employees can choose to opt out. 

Plan Changes

SB 136 makes the following changes to the retirement program:

• Reduces from 120 days to 30 days the time an employee must work for an employer to be a “covered employee” under the program
• Beginning July 1, 2025, extends the program to cover certain personal care attendants who provide personal care assistance under a state-funded program 
• Increases the default contribution level from 3% to 5% for participants who enroll in the program on or after July 1, 2024
• Allows the Comptroller to (a) set automatic annual increases to the default contribution level and (b) invest a participant’s contributions in a capital preservation investment fund for up to 60 days when a participant does not affirmatively select an investment vehicle
• Adds language explicitly stating that no qualified employer shall be a program fiduciary, or be considered to be a fiduciary
• Adds language clarifying that employers are not responsible for the administration, investment, or investment performance of the program
• Adds language stating that employers cannot be held liable with regard to investment returns, program design, and benefits paid to program participants
• Expands the Comptroller’s powers to allow the office to enter into certain contracts and intergovernmental agreements
• Repeals the requirement that the program maintain a list of qualified private sector retirement plan providers

Penalties

Section 7 of the bill features a range of noncompliance penalties for employers that fail to register qualified employees and remit contributions to MyCTSavings:

• $500 for employers with 5-24 employees
• $1,000 for employers with 25-99 employees
• $1,500 for employers with 100 or greater employees

The bill was amended to remove language authorizing the commissioner of the state Department of Labor or the Comptroller to sue businesses for noncompliance.

SB 136 requires that Comptroller’s office to adopt regulations implementing notice and penalty provisions for noncompliant employers.

SB 136 requires the Comptroller’s office to adopt regulations implementing notice and penalty provisions.

Based on the program’s latest report, 6,372 employers are registered with MyCTSavings while another 11,357 certified their exemption.

As of March 31, 2024, MyCTSavings has 25,435 funded accounts and is managing $20.9 million in assets.

The average employee contribution rate is 3.34% with an average monthly contribution of $115.89.

The bill now awaits action in the state House.    

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For more information, contact CBIA’s Ashley Zane (860.244.1169) | @AshleyZane9.