Should State Compete in Retirement Plan Business?
Two legislative proposals could be the first steps in positioning the state to compete with Connecticut’s private-sector retirement planning businesses.
Proponents say the reason for this potential government foray into the private sector is that somehow the state could save consumers money. Yet that’s not really possible, as the studies would no doubt discover.
That’s because federal rules dictate many of the cost-driving, due-process components in retirement plans that even the state couldn’t avoid if it were to enter the marketplace.
What’s more, given the state's inability to save money in its own public-sector retirement funds, taking on a new obligation would likely end up increasing costs, not reducing them.
In addition, if it were to take on the obligations ultimately envisioned under HB 5313 or HB 5337, the state would be liable as a fiduciary for any administrative mistakes. Such liability could be significant–and costly–to state taxpayers.
Connecticut’s retirement planning market is currently well served by the private sector, and any competition from the state of Connecticut would be costly in terms of jobs and potential tax revenue to the state.
For these reasons, CBIA strongly urges policymakers to reject these proposals.
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