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CT State-Run Retirement Bill Heads for Governor’s Signature

The “fixes” are said to be in, and legislation that would give life to Connecticut’s state-run retirement plan for private sector workers is on its way to Gov. Dannel Malloy (D) for his signature.

Connecticut’s state-run retirement plan proposal barely got through the Democratic majority state legislature earlier this month, and Malloy is on record saying that he intended to veto the legislation unless it was changed in the recent special session of the General Assembly.

However, BNA reports that the legislature returned during a special budget session May 12 and 13 to adopt a fiscal package for 2017 that includes a budget implementation bill (S.B. 502) containing language that amended the original IRA bill.

The amending language contained in the budget implementation bill now requires the authority to offer retirement choices provided by multiple vendors and places a cap on annual fees, among other things — adjustments designed to address the governor’s concerns, though a Malloy spokesman told Bloomberg BNA that the bills are under review and declined to specify when the legislation might be signed.

Legislative History

The measure was deadlocked in the state Senate, 18-18, mostly along party lines, with three Democrats joining the GOP minority in opposition. That required Lt. Gov. Nancy Wyman (D) to weigh in and break the tie on April 30. The state’s House of Representatives approved the measure April 26 following a marathon 6½ hour debate. Republicans have vigorously objected to the proposal, citing the new and, they claimed, costly state bureaucracy that would oversee the program.

The concept has the support of Comptroller Kevin Lembo (D), labor unions and groups that advocate for senior citizens.

Program Provisions

The original legislation required employers with at least five workers that don’t already offer a workplace retirement plan option to set up an automatic payroll contribution deferral of 3% for their workers who are at least 19 and who earn at least $5,000 a year, once they have been employed for 120 days. All eligible employees would be automatically enrolled in the program unless they opt out. They could opt out of the program on their own, or increase the deferral rate if they wish. Payroll deductions would go into a Roth IRA overseen by a new authority, the Connecticut Retirement Security Authority, which would be permitted to charge a fee to participants to cover the costs of the program.

If the bill is signed into law, the deductions are expected to begin in January 2018.