Group Now Finalizing Employer Retirement Plan Mandate
A legislative group is now finalizing a new mandate on most Connecticut employers to offer a retirement product to their employees.
Details are still being worked out, but it appears that, unless their employees expressly opt out, employers will have to automatically enroll them into the retirement plan, and set up payroll deductions.
What’s more, employers will have to offer a state-run IRA-style plan unless they choose a commercial plan before the mandate becomes law.
The majority leaders of the State Senate and House—Sen. Martin Looney (D-New Haven) and Rep. Joe Aresimowicz (D-Berlin)—formed the legislative roundtable group after a similar proposal failed in the 2013 legislative session. The group has wrapped up public meetings and is now finalizing a legislative proposal via email.
Primary areas of concern to Connecticut businesses include:
- Connecticut already has billion-dollar unfunded liabilities for state employee retirement accounts—is it fiscally wise for the state to create yet another huge financial and administrative responsibility?
- The new state-run retirement plan is expected to have a guaranteed rate of return—meaning that if it fails to meet investment goals, Connecticut taxpayers will be on the hook to make up the difference
- Such a plan would create new and highly sensitive recordkeeping burdens and costs for thousands of (primarily) small businesses—including mandatory employee meetings, records on employee participation, and automatic payroll deductions
- The new state-administered plan will compete with a variety of competitive products already freely available in Connecticut’s private-sector marketplace
If the legislature adopts the plan, Connecticut would become the only state to fully implement it.
Employers in the state are already grappling with how to comply with the Affordable Care Act and the recent state paid sick leave mandate—why would the state want to add more significant burdens?
For more information, contact CBIA’s Eric Gjede at 860.244.1931 or firstname.lastname@example.org.
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