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WASHINGTON – The Pension Rights Center applauds the Connecticut General Assembly for passing legislation that lays the groundwork for a new state-administered retirement savings plan for private-sector workers who do not have an employer-provided pension or retirement savings plan.
“I am proud of my home state for taking a bold step toward expanding retirement coverage for millions of hard-working Connecticut residents,” said Karen Friedman, the executive vice president and policy director for the Pension Rights Center and a West Hartford native. “This plan is good for families and good for the economy. When people have adequate income in retirement, they will continue to buy goods and services – which helps keep local and state economies moving. Also, they are likely to be more independent and need less support from social service agencies, which ultimately saves the government money.”
The legislation, which passed on Wednesday as part of a larger budget bill, provides $400,000 to start the process of creating a new state-administered retirement savings plan, which would be operated separately from the Connecticut public retirement system. The funding establishes a 14-member Retirement Security Board that is charged with conducting a market feasibility study for a new plan and developing an implementation plan, all to be completed by April 1, 2016.
Working with a diverse range of stakeholders, the Board will develop a low-fee, state-run Individual Retirement Account program to which employees will automatically contribute via their employer’s payroll deposit system, unless they opt out. The Board will also examine how to establish a guarantee, backed by insurance, to ensure that worker’s savings will continue to grow. The plan also provides that benefits will be paid out as a lifetime stream of income so that people do not run out of money in retirement.
Connecticut joins California in enacting legislation to lay the groundwork for state-administered plans for private-sector workers. Massachusetts has also passed a narrower bill to allow their state retirement system to run a savings plan for employees of nonprofit organizations. Other states, including Illinois, Maryland, and Minnesota, are considering legislation to expand retirement coverage for private-sector workers. For more details, see our fact sheet.
RELATED:
Summary of the Connecticut legislation.
Read Karen Friedman’s March 11 testimony in support of a state-administered retirement plan for private-sector workers before the Committee on Labor and Public Employees of the Connecticut General Assembly.
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