(WTNH) — Speaker of the House Joe Aresimowicz, Comptroller Kevin Lembo, and Senate President Pro Tempore Martin M. Looney (D-New Haven) joined with AARP Connecticut Thursday to applaud Connecticut’s decision to move forward with the implementation of the Connecticut Retirement Security Program despite Republican opposition in Washington.
“Helping private-sector workers save their own money for retirement is a sustainable, common-sense solution to prevent people from falling into poverty once they reach retirement age and may be entirely reliant on Social Security benefits,” said Senator Looney. “While I am proud that Connecticut is one of the states leading the way on this issue, I find it to be unfortunate that Republicans in Washington are actively working to deny a secure sound financial future to the 600,000 private-sector workers in Connecticut who don’t have an employee-sponsored retirement savings plan.”
In May, United States Senate voted (50-49) to roll back rules allowing states to create employee-sponsored, state-administered retirement plans.
The new law, championed by Speaker Joe Aresimowicz and Senate President Martin Looney, formed the quasi-public/private Connecticut Retirement Security Authority starting on January 1, 2017. The 15-person Connecticut Retirement Security Authority responsible for oversight of the retirement program held their first meeting on Thursday, Aug. 17, at 2 p.m.
Last year, the General Assembly passed legislation creating a voluntary retirement savings program for the estimated 600,000 Connecticut residents who don’t have a retirement savings plan available to them through their employer. Connecticut’s plan is slated to begin in less than a year — in January 2018 — and it will save 3 percent of workers’ pay after they’ve been with a company for 120 days.
“There is an entire generation of workers, many of them lifelong hardworking middle class people, headed to retirement financially unequipped, in part due to lack of access to a workplace-based retirement savings option,” said Lembo. “This is not just a serious issue for individuals and families who are financially forced to delay retirement indefinitely, but for our entire state and national economy. I’m grateful that Connecticut is among the leading states to responsibly recognize and act to protect the interests of working families.”
The legislation creates a program in which employees make voluntary contributions to be deposited into a professionally managed retirement fund; every employee would have the chance to enroll in the retirement savings program. Employers wouldn’t have any fiduciary responsibility and wouldn’t be required to pay any administrative fees. The program is designed to be self-sustaining and low-risk.
The plan will require all Connecticut businesses of five or more employees with no pension or 401K plan option to participate in the retirement security program. It will be voluntary for employees, who will be automatically enrolled but have the ability to opt out, and employers will not be required to match contributions.
Last year, the AARP shared the results of its report, “A Common-Sense Approach: The 2016 Connecticut Work and Save Plan,” a survey of 1,000 Connecticut residents ages 35-64 which was conducted by the AARP Public Policy Institute. According to the survey:
- 88 percent of Connecticut residents wish they had saved more for their retirement
- Regardless of political affiliation, 79 percent of Connecticut residents agree that elected officials should support a state retirement savings plan
- 65 percent of Connecticut residents are “anxious” about having enough money for retirement
“AARP is glad Connecticut is joining other states, such as Oregon and Maryland, to provide opportunities for people to save for retirement at work,” said John Erlingheuser, AARP Connecticut director of advocacy. “Connecticut’s leadership role in providing 600,000 people without a workplace retirement savings plan an opportunity to build a secure financial future will help cut into the huge gap between what exists for retirement and what is needed, as well as reduce the reliance on state-funded social safety net services in the future.”
A recent AARP Public Policy Institute report found Connecticut would save more than $90 million on public assistance programs between 2018-2032 if lower-income retirees save enough to increase their retirement income by only $1,000 a year
More than 90 percent of Connecticut residents say a retirement savings plan should be easy to use, low-cost, and should follow workers from job to job. The 2016 retirement security legislation was enacted two years after Senator Looney and Speaker of the House (and then-House Majority Leader) Aresimowicz led passage of a bill creating the Connecticut Retirement Security Board, which was tasked with conducting a market feasibility study and a comprehensive proposal for the creation of a retirement plan for private-sector Connecticut workers.
“We’ve worked very hard over the past few years to get to this point,” said Aresimowicz. “And these authority meetings are the final step to making sure that our hard working residents are given the tools they need to save for the comfortable retirement they have earned.”