State-Run Retirement Plan For Private Workers Closer to Reality for Connecticut

The Connecticut Retirement Security Board this week released a report endorsing a state-run savings plan for nongovernment workers who don’t have access to a retirement plan through their employer.

The Board’s report recommends a system that would require all employers with at least five employees to provide workers with an optional IRA.

Legislation will likely be written this year, as several lawmakers are already on board.

More from the Wall Street Journal:

The Connecticut Retirement Security Board, created in 2014 to study how such a retirement system could work, plans to write legislation to be introduced in 2016 that would create the retirement system.

The state’s Democrats have advocated the concept for years. Democratic Senate President Martin Looney said Monday the concept was one of his legislative priorities for the coming year.

In Connecticut, the retirement security board recommended requiring employers with at least five employees that don’t offer retirement plans to provide a payroll-deposit option to enroll workers in Individual Retirement Accounts, or IRAs.

The report found that the system would be sustainable by the end of its second year if it attracts about $1 billion in investments and roughly 252,000 participants.

[…]

Republican Senate Minority Leader Len Fasano said the idea had merit, but his support hinges on the details of the final plan.

Mr. Fasano said that program should be completely optional for employees. The board, however, has recommended a system where employees would have to opt-out if they didn’t want an IRA, which Mr. Fasano said he opposes. “If this is optional for the employee, then let them opt-in,” he said.

Similar savings plans have been established in California, Illinois, Oregon, and several other states.

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