Connecticut has chosen an out-of-state company to manage its troubled state-run retirement savings plan.
State Comptroller Kevin Lembo announced April 20 the Connecticut Retirement Security Authority's selection of New York-based Sumday Administration LLC as program administrator.
Lembo said the The Bank of New York Mellon Corporation subsidiary "was chosen based on their administrative capabilities, relationships within the financial sector, and commitment to building a successful retirement security program in partnership with the authority."
The comptroller assumed oversight of the plan earlier this year after the CRSA ran out of funding and laid off its executive director.
While the Lamont administration declined to extend a requested $1 million line of credit to the authority, the comptroller's office received state funds to hire program personnel.
The proposed retirement plan—now two years past its original 2018 launch date—was supposed to be managed without using taxpayer funds.
Series of Delays
Approved narrowly by the state legislature in 2016, the program has experienced a series of delays related to financial, legal, and personnel issues.
Businesses with five or more employees will be required to automatically enroll any full- or part-time workers not eligible for an employer-sponsored retirement plan in the state-run plan.
Employers will be required to deduct 3% of a worker's salary each pay period and transmit it to the state for deposit.
CBIA's Eric Gjede notes the mandate allows the state to enter an industry with an unfair advantage over private sector firms.
"Private sector retirement plans are readily available to all workers today in Connecticut," he said.
"And unlike the state's proposed plan, those plans take contributions before taxes, are solvent, and comply with the Employee Retirement Income Security Act."