Labor and Public Employees Committee


Bill No.:




Vote Date:


Vote Action:

Joint Favorable Substitute

PH Date:


File No.:



Senator Martin Looney 11th District

The Labor and Public Employees Committee


The lack of access to quality, low-cost retirement savings plans.


New language in sections 1 through 14 and in sec. 15, Section 3-13c of the general statutes is repealed and new language is added.


Natasha Pierre, Permanent Commission on the Status of Women testified in support of the bill. Twenty-five percent of women that retire do not have retirement savings or any other savings. Social Security is sometimes the only source of income for retired women.

This puts many individuals at a disadvantage. Connecticut workers who save on average more than $100 a month consistently enjoy basic economic security in retirement.


Senator Martin M. Looney testified in support of the bill. Too many of our citizens approaching retirement have nothing but Social Security to depend on. More and more children of the baby boom are reaching retirement age and the percentage of private sector employers offering retirement plans has fallen from 68% in 2001 to 58% in 2012. He said “California has taken action to tackle this issue by enacting the California Retirement Investment Savings Plan which will create a supplemental retirement savings plan for private sector workers who do not have access to retirement plans through their employer. The program is designed to be self-sustaining and low risk due to the modest rate of return and long investment horizon.” Connecticut would be well served by a retirement savings plans to address the retirement security crisis.

Dr. Joelle Saad-Lessler testified that this bill is not a new idea, in fact California has recently passed similar legislation allowing individuals to open a Guaranteed Retirement Account through the existing Connecticut Retirement and Trust Fund would give private sector workers access to the best financial managers and the lowest fees. Between 2,000 and 2,010 sponsorship of retirement plans dropped from 65% to 58%. A growing number of Connecticut residents find themselves not ready for retirement and will turn to the state for help. This crisis needs to be addressed now.

Liz Dupont-Diehl, Policy Director for the Connecticut Association for Human Services submitted testimony in favor of the bill. This bill will empower all families to build a secure economic future. A universal pension will contribute to closing the income gap among retirees. She said “last month the number of working poor families in Connecticut-that is, earning 200% or less of poverty, or $45,622 for a family of four-rose 5% since 2007. Now, 21% of our 389,000 working families are low income. Our report also found that 61% of low-income families have a high housing burden-paying more than 33% of their income on rent- and that the rise in low-income working families is increasing affecting children.” Better retirement savings would mean fewer people having to rely on public assistance.

Karen Friedman, Vice President, Pension Rights Center testified that as a coordinator of Retirement USA this bill will provide future generations of workers sufficient income for retirement. According to the National Institute on Retirement Security 84% of Americans are concerned about their ability to achieve a secure retirement. The top financial concern is not having enough money for retirement. The Retirement Income Deficit facing Americans is an astounding $6.6 trillion. We have developed 12 principals that we believe should underlie a new system. We believe that any new private system should build on top of an unreduced Social Security System.

Lori Pelletier, Connecticut AFLCIO, testified that this bill will help those low income workers who have the most difficult time saving for retirement. She said “Too many employers who sponsor pension plans that provide a lifetime, guaranteed income are freezing, terminating, and otherwise cutting back those plans and replacing them with less secure 401(k) plans.” Every worker should have a defined benefit pension and are rarely provided the opportunity to join a traditional for-profit savings plan.

Kevin Lembo, State of Connecticut Comptroller, submitted testimony supporting the bill. This legislation would provide a public retirement plan in the state. Comptroller Lembo suggested that a task force be created to analyze the potential administrative burden and risks. He said “the nationwide gap between what Americans will need to retire-and what they actually have-is an astonishing $6.6 trillion, according to the Center for Retirement Research at Boston College.” With the state's aging population on the rise we need to be proactive with options for families to save towards retirement. The state should be encouraging the development of a new retirement savings option that is secure and efficient.

AARP submitted testimony in support of the bill. One of AARP's major priorities is to improve access coverage and adequacy of pensions and other retirement vehicles. Forty six percent of workers between the ages of 45 and 54 have less than $10,000 in savings for retirement. This bill would be the ideal vehicle for low income workers to contribute to a retirement plan.

Beverly Brakeman, UAW Region 9A submitted testimony supporting the bill. This proposal would create a retirement program better than what is currently offered by most employers.

Today bold steps are necessary to ensure that retired citizens have the resources available to plan for their retirement. Citizens with sufficient retirement plans would save the state and local government money by not being on government assistance.



Hugh Barrett, Assistant Vice President, Mass Mutual submitted testimony stating that this state-run plan as proposed would not achieve the goal of expanding the retirement funds of low income workers. State governments are not subject to the fiduciary standards under ERISA that apply to private sector employers. If the state were to assume ERISA it would represent a potential liability for the State and could subject the State to litigation from plan participants and their employers. The Internal Revenue Code already provides for a wide variety of tax-favored retirement vehicles.

Eric Gjede, CBIA testified in opposition to the bill. The state's creation of a defined benefit plan would be costly and expose the state to unnecessary liability. Any retirement plan for private sector workers would require compliance with ERISA and impose significant fiduciary duties on the plan's operator. The business community suggests there are number of private sector options that would provide a safer option for employees to invest in their retirement.

Lisa Bleier, Securities Industry and Financial Markers Association submitted testimony stating that this bill is a step in the wrong direction because it would burden the State with additional costs and liabilities. There are various individual retirement account options for employees. Small and medium sized businesses and not for profit employers do have access to reasonable cost retirement savings plan. There are many fairly priced savings options available. There is no reason why the State should compete with the financial services that employ thousands of workers to provide the same financial retirement plans. She said “conflicts could arise between federal governing retirement plans and laws enacted by individual states. We are also concerned that employees who save for retirement in a state plan will not have the same rights and protections that are provided under the federal regime.”

Insurance Association of Connecticut submitted testimony in opposition to the bill. The retirement plan market in Connecticut is highly competitive and an integral part of this state's economy. New defined benefit plans are not being created because there is little demand for them. There is no evidence that a state-run retirement plan would be administered cheaper than in the private marketplace and the state would likely incur substantial start-up costs.

Michael Callahan, American Society of Pension Professionals and Actuaries testified that the intent of the bill is good it would be a nightmare in practice. Federal law does not permit salary reduction contributions to a defined benefit plan for non-government employees, so their contributions would be subject to income tax. Private-sector employees would receive better tax treatments for IRA contributions and ERISA does not apply to plans for state and local government employees but it does apply to private employers'. All employers that have employees covered by the defined benefit plan would have to adopt the plan as a single employer and would be subject to the liabilities for private employers under ERISA.

Reported by: Pamela Bianca

Date: 3/21/2013