State Retirement Plan Mandate Delayed Indefinitely
Connecticut has officially delayed implementation of the state’s controversial retirement plan mandate.
The Connecticut Retirement Security Authority board of directors voted last month to delay the Jan. 1, 2018 implementation date set by legislation that narrowly passed the General Assembly in 2016.
State Labor Commissioner Scott Jackson, who chairs the CRSA board of directors, released a statement Nov. 7 saying the authority did not set a new effective date for the mandate.
The costly, burdensome mandate requires businesses with five or more employees to enroll any full- or part-time employee not eligible to participate in an employer-sponsored plan into a retirement savings plan.
“Complying with this new retirement plan mandate is something employers are extremely worried about,” says CBIA counsel Eric Gjede, a labor law specialist.
“So it’s a welcome bit of relief to know that, while the mandate isn’t going away, it will be delayed a while longer.”
Mandate Faces Challenges
Implementation of the Connecticut mandate has faced a series of challenges.
CRSA is responsible for designing and implementing the Connecticut Retirement Security Exchange, which will administer the mandate.
“The board agrees that because the authority is currently in the preliminary stages of plan development, the implementation date specified in the state statute is not achievable,” Jackson said.
At this time, no action is required on the part of employers to comply with any requirements in the legislation.
In May this year, the U.S. Congress overturned an Obama-era regulation that allowed states to manage plans without complying with consumer protections governed by the Employee Retirement Income Security Act.
For Connecticut to implement the mandate, the state must now comply with the same costly but important consumer safeguards ERISA requires for private sector plans.
Compliance Not Required
Gjede noted that amid the ongoing confusion, many Connecticut businesses have been solicited by retirement product vendors pushing "mandatory" plan enrollments.
In his statement this week, Jackson emphasized "that at this time, no action is required on the part of employers to comply with any requirements in the legislation."
"There appears to be misinformation that employers must purchase retirement savings products for their employees by Jan. 1, 2018," Jackson said.
"However, we want employers to be aware that this is inaccurate information."
He added that any employer contacted by a vendor suggesting a retirement plan must be offered to employees by Jan. 1 should email the CRSA.
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