State Should ‘Retire’ Plan to Compete with Businesses
Should state government get into the retirement planning business and compete against the ample supply of excellent products already available through Connecticut companies?
That’s a question that lingers after a Labor Committee hearing this week on SB 249, a proposal that would in fact put the state in competition with a major sector of Connecticut’s economy.
SB 249 requires any business with five or more employees (full- or part-time) that does not provide employees with access to an IRA, 401(k) or pension plan to facilitate employee participation in a state-run retirement plan.
Employers would be responsible for payroll deductions, transferring plan payments, chasing down employees to determine their interest in the plan, and hosting open enrollment periods every two years.
If enacted, the bill would make Connecticut the first state in the nation to mandate a state-run retirement plan for private sector workers.
State government would be entering into competition with an industry that’s already well served by Connecticut’s private market–with no evidence that the state could compete in a more cost-effective way.
Not ‘good for business’
Proponents of the measure say it is “good for business,” but nothing could be further from the truth.
The financial services sector is highly active and competitive—offering consumers myriad retirement planning options. It’s also a major economic driver, employing nearly 100,000 people in Connecticut.
What value would it be to shoehorn a state-run plan into this market and jeopardize any of those much-needed jobs?
SB 249 also places the burden of facilitating the new state plan on the backs of Connecticut’s business community.
And the guaranteed rate of return promised to plan participants by the bill also could result in financial liability for all taxpayers if the plan does not meet the guarantees.
Connecticut has a reputation, seen in recent nationwide surveys, of not being a good place to do business. Every effort should be made to pursue policies that improve Connecticut's rankings in order to attract more private sector businesses.
Instead, with this bill, Connecticut sends the message that not only are we already a difficult place to do business – but if you locate here, the state may decide to compete with you.
Connecticut businesses need the state to be their partner, not a competitor, in order to grow and provide more opportunities for our residents – not to compete with us.
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