After more than a year’s work, a study panel is recommending how state lawmakers can impose a new—and unnecessary—mandate on Connecticut employers and employees.

In a report to state lawmakers, the state's Retirement Security Advisory Board outlines how to require nearly every business in the state to offer any of their full- or part-time employees a state-sponsored retirement plan, if the company doesn’t already offer a plan to all employees.

Under the board’s recommendations:

  • Businesses with five or more employees would have to auto-enroll their employees if they’re not participating in an employer-sponsored plan—putting the burden on the employee to opt out if desired
  • Employers would face "legal enforcement of employer obligations” and could be "penalize[d] … for failing to enroll employees in the program"
  • Businesses would have to pay the cost of the additional payroll deductions caused by the new state plan
  • Employees would face a default contribution rate of 6% of their pay—putting stress on those struggling to meet financial obligations

What’s more, the state retirement plan would become the default savings option, jumping ahead of the many Connecticut's financial service sector businesses that offer retirement plans.


The proposed mandate isn’t really necessary because people already have an abundance of easy, affordable, and quality retirement savings products from which to choose in Connecticut.

Basically, the proposal offers a supply answer to a demand problem.

The mandate is unnecessary, because people already have an abundance of easy, affordable, and quality retirement savings products from which to choose.
Many people either aren’t aware, or convinced, of the importance of saving for retirement, or are simply making their own decisions on how to use their own paychecks—such as, to make ends meet.

Instead of better educating people about retirement planning, the proposal would do the planning for them by arbitrarily reducing the take-home pay of many employees in Connecticut by 6%.

Jobs At Risk

The plan would also have unintended consequences on jobs.

In recent statement on the state budget, Comptroller Kevin Lembo, who also co-chairs the Retirement Security Advisory Board, observed that Connecticut’s “financial services sector has not returned to its pre-recession employment numbers.”

Yet the board’s plan—for a single, government-offered savings option—would further risk many financial services jobs in the state.

Still, the program will be sold as a cure-all to the retirement savings gap during the 2016 legislative session.

With lawmakers finally seeing the importance of making Connecticut competitive again, now is not the time to be adding new mandates on businesses or threatening the jobs created by important industry sectors.

For more information, email or call CBIA’s Eric Gjede at 860.244.1931 | @egjede

Filed Under: Employment Law

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