Retirement Plan Diverts Worker Savings to Fund More Bureaucracy
A new mandate on employers will be voted on in the Connecticut state House as early as next week.
HB 5591 requires all businesses with five or more employees to automatically enroll any full or part time employee not currently eligible for an employer-sponsored retirement plan, or all employees if the employer does not offer a plan, in a new state-sponsored retirement program.
Workers’ paychecks will be subject to a default 3% deduction unless they take the initiative to opt out of the plan.
While employers won’t have to directly contribute to the plan, they will have the cost and responsibility of administering the program, from enrollments to payroll deductions to plan changes.
Advocates have claimed the reason for the new state-sponsored savings plan is to get more people to put aside money for retirement. Yes, and no.
The default plan employees are put in not only denies them the benefit of a tax deduction for their retirement contributions.
It eliminates the tax-deferred savings in order to maintain state tax revenues and hide the “cost” of allowing individuals to save for their own retirement.
HB 5591 also takes a portion of an employee’s hard-earned retirement contributions to fund a new quasi-government agency.
In other words, the bill’s supporters want you to save—just not that much.
People will have their retirement savings appropriated by the state to fund more government employees--a charge the worker could easily avoid simply by enrolling in any private sector plan.
Retirement plans are readily available to anyone simply by walking into their local bank and enrolling or call a local insurance broker
CBIA urges Connecticut state lawmakers to reject HB 5591 as a too-transparent effort to increase state tax revenues that’s also too costly for Connecticut’s workers.
EXPLORE BY CATEGORY
Stay Connected with CBIA News Digests
The latest news and information delivered directly to your inbox.