State-Run Retirement Plan Hires Executive Director

The Connecticut Retirement Security Authority has hired an executive director to manage the controversial state-run retirement plan lawmakers narrowly approved in 2016.
CRSA appointed West Hartford Town Council member Mary Fay, who has years of experience in human resources, retirement planning, and finance.

Fay also was a Republican state legislative candidate last fall, losing the 18th House District race to Democrat Jillian Gilchrest.
She will oversee a program requiring businesses with five or more employees to enroll any full- or part-time worker not eligible for an employer-sponsored plan in a state-run IRA.
At a January 2018 meeting, CRSA members discussed paying the executive director $130,000 a year plus other compensation, including retirement and healthcare benefits.
The authority’s next step is to hire a financial services company to administer the plan, which was originally scheduled for a January 2018 rollout.

Ongoing Obstacles

The plan has faced a series of obstacles, including a lack of funding, continued opposition from the business community, and questions about its legality.
Those questions arose after the repeal of a federal rule allowing states to enter into the retirement business without complying with consumer protections required for private sector retirement options.
The authority needs additional legislative changes to align its proposal with requirements put in place when the authorizing statute was adopted years ago.
But rather than meet those requirements, the board plans to try to change the law to meet the specifications of their proposed program.
In addition, the authority has not submitted a report to the legislature, due at the beginning of this month, which includes detailed implementation dates.

No Tax Benefits

Plan supporters maintained this program was needed because private sector workers were not saving enough for retirement.
The plan’s default 3% employee contribution is deducted from wages after taxes, and those contributions will be used to fund the bureaucracy required to administer the plan.
Employers object to this proposal because all aspects of enrollment will become their responsibility.
They are essentially responsible for the cost and burden of selling the plan on behalf of the state and will be penalized for any delay in transmitting employee contributions.
Lawmakers opted for the state plan, which offers no tax benefit to employees, rather than private sector plans, which are readily available to all workers.

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For more information, contact CBIA’s Eric Gjede (860.480.1784) | @egjede