The House this week narrowly approved a bill that starts the process of injecting state government into Connecticut’s private-sector retirement plan business.
But HB 5313 misses the mark, for two reasons.
Supply and demand
First, the problem is not supply—Connecticut’s existing retirement market is well served by private-sector professionals who are trusted advisors to their clients, providing retirement advice and setting up plans for them.
People have many options to choose from to effectively save for retirement, such as individual retirement accounts, annuities and other products that are available from thousands of government-regulated financial planning professionals throughout Connecticut.
The real problem, say many experts, is demand—while many people say saving for retirement is a priority for them, not enough are actually doing it and too few are taking the initiative to get started.
HB 5313 misses this point—instead exploring the idea of squeezing the state into the complex retirement plan market just to compete with Connecticut’s financial planning specialists.
Second, by becoming responsible for administering these retirement plans the state would be taking on the fiduciary duties of plan administrators. In other words, if—and really, when—mistakes are made in the plans’ administration, the state of Connecticut will be financially liable under federal law.
And of course, this responsibility will fall on state taxpayers.
CBIA continues to urge lawmakers to reject this misguided attempt to thrust the state of Connecticut into the administration of private retirement plans.