HARTFORD, Conn. (AP) — Connecticut’s private sector workers would have access to state-run retirement plans under legislation moving through the General Assembly with the support of majority Democrats, but questioned by skeptical Republicans who say the state should stay out of private investment decisions.
Two committees have approved a measure establishing a trust fund to administer retirement plans for workers who would automatically be enrolled unless they opt out.
Democratic Rep. Peter Tercyak, the House chairman of the legislature’s Labor and Public Employees Committee, said the legislation is intended to provide workers with access to retirement plans even if their employers don’t.
“We seem to have lost previous generations’ culture of savings,” he said Tuesday as the legislature’s Appropriations Committee debated the measure. “This is an attempt to help solve that problem.”
Republican Sen. Rob Kane of Watertown said workers can invest in retirement plans without the help of the state.
“I don’t know if that is going to actually solve the issue by creating a whole new plan for something that is currently available in the market,” he said.
Connecticut’s legislation, which now heads to the Senate, would extend access to individual retirement accounts to employees who are not eligible for an employer pension or other unspecified “arrangement” recognized in federal tax law. For a fee, a trust fund board would establish investment choices, provide educational information, determine eligibility and conduct other administrative functions.
Labor unions and their Democratic allies have voiced alarm at the erosion of pensions as companies, facing intense competition and pressure on profit and revenue, eliminate the costly benefit. In its 2012 report, the Pension Benefit Guaranty Corp., a federal agency, said fewer than half of private sector workers, or 45 percent, have employer-provided retirement plans. Most are contribution plans such as a 401(k) in which workers invest money in stocks and bonds rather than a company pension, it said.
Beverley Brakeman of the United Automobile Workers told lawmakers in testimony at a public hearing that the legislation is a “new and developing idea.”
It would establish retirement accounts outside the workplace, allowing workers to control their own retirement “in a way that is not tied to an employer’s need to grow revenue and profits,” she said.
Bob Kehmna, president of the Insurance Association of Connecticut, said the legislation is unnecessary. “Connecticut already benefits from highly functional and competitive services,” he said.
Republican Rep. Gail Lavielle of Wilton said she has “quite a few problems” with the measure, including what she said is a lack of clarity and a “deep skepticism” about how well funds would be managed. Before the Appropriations Committee approved the legislation 28-20 on Tuesday, she told fellow lawmakers that numerous individual retirement accounts are available to workers regardless of what state government may offer.
“It is the choice of all of our citizens to save or not to save for retirement and I’m very uncomfortable with the idea of the government pushing people in one way or another and any type of quasi-automatic enrollment unless someone opts out seems to move in that direction,” she told said.