It's by no means a sign of common ground, but Connecticut's legislature has managed to pass a proposal to create a retirement savings plan for employees within the state whose employers do not already offer one.
The bill passed both the House and Senate, but no Republicans in the Senate voted for the measure, and even three Democrats voted against it; it passed on a tie-breaking vote cast by the state's Democratic lieutenant governor Nancy Wyman.
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Even Democrats say there are details to hammer out with Governor Dannel Malloy; that's hoped for before the regular session ends at midnight on Wednesday, May 4. But AARP backed the bill and its Connecticut state director, Nancy Duncan, was quoted in reports praising the Senate for passing the bill.
The CT Post quoted Duncan saying, "We are confident the governor will also support the bill that adds no additional cost to taxpayers and lead to less reliance on state-funded social safety net services in the future."
The legislation would create a quasi-public system called the Connecticut Retirement Security Program, aimed at providing the 600,000 Connecticut residents not already covered by a private employer's plan access to a means of saving for retirement.
The system would automatically enroll workers, unless they opt out, and allow them to save between 3 and 6 percent of their taxable wages via automatic deduction. The 3 percent would be automatic, but they could choose to increase that.
Payroll deductions would go into a Roth IRA to be overseen by the legislation's other creation, the nine-member Connecticut Retirement Security Authority. The authority would be allowed to charge participants a fee to cover the program's costs. While the system would be quasi-public, it would not be run by the state, but by a private-sector vendor. It's expected to begin during the fiscal year that starts July 1, 2017, with deductions beginning in January of 2018.
Private-sector employers in the state that do not already offer a 401(k) or other payroll deduction retirement option, and who have at least five workers who earned at least $5,000 in the previous year, would be required to participate. All their workers aged 19 and older who have worked for the employer for at least 120 days would be covered by the plan.
The plan would be portable, moving with workers from job to job, and would provide tax advantages to participants.
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