Connecticut's legislature paved the way this week for the creation of a state-run public IRA plan that would be open to all private-sector workers.
The General Assembly has allocated $400,000 from next year's budget for the creation of the Connecticut Retirement Security Board, to be run within the State Comptroller's Office. The board, which will be comprised of employees, employers, investment experts and representatives of the Governor's office, is charged with conducting a feasibility study and a plan for implementation of the new retirement plan by 2016.
The funds mark the largest ever investment toward creating a state-run retirement plan for workers in the private-sector. There are currently more than 740,000 workers in Connecticut without access to an employer-based retirement savings plan.
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The prospective retirement system must achieve several core objectives without adding costs to employers. A guaranteed rate of return, universal access, and low-administrative costs are among the mandates laid out by the Legislature.
The movement for the creation of a state-run retirement savings plan was spearheaded by Retirement for All CT, a consortium of organizations that includes the Connecticut Alliance for Retired Americans, several unions, the National Organization of Women, and trade organizations representing African-American and Latino workers.
"This is an incredible moment as Connecticut has just catapulted into the national lead on this critical issue for working families," said Sal Luciano in a press release, an executive director with AFSCME, the state's largest public employee union. "By laying the groundwork for a public retirement savings option for all private-sector workers, Connecticut is making a serious, first-in-the-nation investment with the aim of developing an optimal plan for our state that will ensure the greatest possible return on workers' savings."
No other state has made such an investment in providing universal access to retirement accounts.
"Private-sector businesses have failed to deliver retirement security for all. Nothing they say can make those numbers — 740,000 without access to a retirement savings plan at work — go away," added Lori Pelletier, executive secretary-treasurer of the Connecticut AFL-CIO, said in the release. "By laying the groundwork for a Public Retirement Plan open to all private-sector workers, the Legislature has sent a powerful signal that it will no longer let this crisis continue."
Across the nation, only 52 percent of working-age employees have access to a retirement plan on the job, the lowest figure since 1979, according to the National Institute on Retirement Security. Among minorities, retirement challenges are even greater. The majority of African-American and Latino households (62 percent and 69 percent respectively) have no assets in retirement accounts.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
