Budget Makes Major Change to State-Run Retirement Plan
Tucked inside the 567 pages of the 2019-20 state budget is a significant change to the problem-plagued, much-delayed state-run retirement plan.
Lawmakers in 2016 narrowly approved a bill mandating businesses with five or more employees automatically enroll any full- or part-time worker not eligible for an employer-sponsored retirement plan in a new state-run plan.
Once implemented, the Connecticut Retirement Security Authority-administered plan will deduct 3% of a worker’s salary each pay period, deposited into an individual retirement account.
Workers not interested in the state-run plan—which will not offer the tax benefits of private sector plans—must opt out each year, in writing.
At the time, then-Gov. Dannel Malloy threatened to veto the bill if it did not include multiple vendors.
The idea was to offer workers paying into the system a variety of plans and options from many vendors.
Malloy was concerned CRSA would undermine the private securities sector, which, like most of the business community, opposed the state-run plan.
No Public Hearing
However, the two-year state budget includes language that eliminates any reference to multiple vendors.
This allows CRSA to choose a single vendor to offer products and services to workers, rather than many vendors offering several plans and options.
No public hearings were held on the change.
Although legislators approved the controversial retirement plan over three years ago, it has faced several obstacles, including a lack of funding, questions over its legality, and continued private sector opposition.
The state-run plan moved forward in January 2018 when CRSA named West Hartford Town Council member Mary Fay as executive director.
However, the program has yet to get off the ground. CRSA now plans to launch the program later this year.
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