For private employees who don’t have workplace plans, Connecticut will now have a state-sponsored plan to save for retirement. Unfortunately, what could have been a useful program was severely weakened with changes required by Gov. Dannel Malloy in the face of fierce financial services industry lobbying. This is what happened:
The Senate narrowly gave final passage Saturday to a controversial proposal that would require certain private-sector employers to automatically enroll workers in retirement savings plans overseen by a new quasi-public authority. But while the bill has passed both the House and Senate, it could still undergo changes.
Recently we have witnessed a disturbing shortfall in the effectiveness of government policies towards retirement security. Many businesses are eliminating or reducing the pension benefit notwithstanding government incentives. The IRA has not grown in coverage to make up the difference. Today nearly 50 percent of private sector workers are looking forward to an old age income that limited to just Social Security, which is inadequate to stay out of poverty. The Connecticut Retirement Security Board proposal to offer a state-run IRA with contributions through payroll deduction and with low fees would mostly repair the shortfall in Connecticut retirement savings.
The Democratic majority in the House of Representatives outlasted a Republican filibuster early Tuesday to pass legislation that would create a quasi-public authority to offer private-sector workers a retirement savings program. Gov. Dannel P. Malloy was non-committal on the bill, but says he favors a key provision: a mandated payroll deduction for retirement savings.