Board Seeks More Money for State Retirement Plan
The Connecticut Retirement Security Board met earlier this month to begin the work of planning a state-administered, IRA-style savings program for private sector workers whose employers currently don’t provide access to a retirement plan.
Whatever the board ultimately decides, employers likely will have to shoulder the administrative and financial responsibility of facilitating their employees’ participation—which will increase business costs and impact the state’s ability to compete with others in attracting new businesses.
The plan already impacts taxpayers, who are footing a $400,000 bill to study the issue. State Treasurer Denise Nappier, co-chair of the Retirement Security Board, says that sum might not be enough.
At the meeting, Grant Boyken, acting executive director of the California Secure Choice Retirement Savings program, spoke about a similar situation in the Golden State.
Boyken noted that the study has already cost California taxpayers around $400,000 to $600,000 – and the program has set a fundraising goal of $1 million to complete the study.
California has been studying the development of a plan similar to the proposal being developed by the board in Connecticut.
However, California needs to overcome several hurdles, including confirming that its proposal does not violate federal ERISA law, that it will receive favorable tax status from the IRS–and that the state can pay for the study .
Members of the Connecticut board suggested entering into agreements with other states undergoing similar studies to pool the costs.
But many Connecticut businesses–particularly those in the state’s financial services sector–question the need for the expense at all.
Financial services institutions in the state already offer a vast array of low-cost retirement savings products. Additionally, this taxpayer-funded study would not provide access to anyone who can’t already walk into a local bank and apply for a retirement savings plan.
A plan administered by the state would needlessly compete with private sector providers with no guarantee the state plan would be any better or less costly to participate in.
The board’s deadline to study and develop the plan is April 1, 2016. We will continue to report on the board’s progress through the Government Affairs Report.
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