Connecticut Seal

General Assembly

Amendment

 

February Session, 2016

LCO No. 5667

   
 

*HB0559105667SRO*

Offered by:

 

SEN. FASANO, 34th Dist.

SEN. WITKOS, 8th Dist.

SEN. KELLY, 21st Dist.

SEN. FRANTZ, 36th Dist.

SEN. MCLACHLAN, 24th Dist.

SEN. KANE, 32nd Dist.

SEN. GUGLIELMO, 35th Dist.

SEN. CHAPIN, 30th Dist.

SEN. BOUCHER, 26th Dist.

To: Subst. House Bill No. 5591

File No. 747

Cal. No. 522

"AN ACT CREATING THE CONNECTICUT RETIREMENT SECURITY PROGRAM. "

Strike everything after the enacting clause and substitute the following in lieu thereof:

"Section 1. (NEW) (Effective from passage) As used in this section and sections 2 to 7, inclusive, of this act:

(1) "Balanced fund" means a mutual fund that has an investment mandate to balance its portfolio holdings. The fund includes, but is not limited to, a mix of stocks and bonds in varying proportions according to the fund's investment outlook;

(2) "Board" means the Connecticut Retirement Security Board established pursuant to section 31-411 of the general statutes;

(3) "Eligible employer" means any person, firm, business, educational institution, nonprofit agency, corporation, limited liability company or other entity, including a sole proprietorship or general partnership, that (A) is registered to conduct business in the state during the calendar year, and (B) employs fewer than one hundred qualified employees at the time of enrollment;

(4) "Enrollee" means any employee who is enrolled in an individual retirement account offered by an eligible employer through the Connecticut Small Business Retirement Marketplace;

(5) "Qualified employee" means an employee who is defined by the Internal Revenue Service to be eligible to participate in a specific retirement plan;

(6) "Qualifying plan" means a retirement plan option offered by private sector financial services firms that satisfies the requirements (A) to participate in the Connecticut Small Business Retirement Marketplace in accordance with sections 2 and 3 of this act, or (B) of the myRA retirement program administered by the United States Department of the Treasury;

(7) "Target date fund" means a hybrid mutual fund that automatically resets the asset mix of stocks, bonds and cash equivalents in its portfolio according to a selected time frame that is appropriate for a particular investor; and

(8) "Connecticut Small Business Retirement Marketplace" or "marketplace" means the retirement savings program created to connect eligible employers and their employees with qualifying plans to increase retirement savings.

Sec. 2. (NEW) (Effective from passage) (a) (1) There is established the Connecticut Small Business Retirement Marketplace. Not later than October 1, 2016, the Connecticut Retirement Security Board shall contract with an executive director and assistant executive director who shall not be considered employees of the state and shall not be members of the board but who shall serve at the pleasure of the board. The executive director and assistant executive director shall receive such compensation as prescribed by the board, pursuant to a contract entered into between the board and such directors, which shall be borne solely and equally through assessments or user fees charged to private sector financial firms that offer a qualified plan through the marketplace.

(2) The executive director and assistant executive director shall contract with a private sector entity to establish the Connecticut Small Business Retirement Marketplace program that shall allow qualified employees to access qualifying plan options. The program shall: (A) Establish a protocol for reviewing and approving the qualifications of private sector financial services firms that seek to participate in the marketplace; (B) design and operate an Internet web site that includes information about how eligible employers and qualified employees may participate in the marketplace; (C) develop marketing materials about the marketplace that shall be distributed by the Secretary of State to eligible employers electronically or by mail; (D) identify and promote existing federal and state tax credits and benefits for employers and employees that are related to encouraging retirement savings or participating in retirement plans; and (E) promote the benefits of retirement savings and other information that promotes financial literacy. The executive director and assistant executive director shall consult with the Connecticut Retirement Security Board in designing and managing the marketplace.

(b) (1) The executive director and assistant executive director shall use only federal or private funding sources, including private foundation grants, to pay for marketplace expenses. On behalf of the marketplace, the executive director or assistant executive director shall seek federal and private grants and shall be authorized to accept any funds awarded to the executive director or assistant executive director for use in the marketplace. The marketplace shall be self-sustaining and no state funds shall be expended for the purposes of the marketplace. The executive director and assistant executive director shall charge an initial application fee and assessments or user fees to private sector financial firms that participate in the marketplace to generate the funding necessary to support the operations of the marketplace.

(2) Only eligible employers and qualified employees shall be eligible to participate in the marketplace. Prior to connecting any qualified employee with a qualifying plan in the marketplace, the executive director and assistant executive director shall design a plan for the operation of the marketplace. The marketplace shall approve not less than three types of plans for eligible employer participation. Such plans shall include, but need not be limited to: (A) A SIMPLE IRA target date fund or other similar fund with asset allocations and maturities designed to coincide with the expected date of retirement; (B) a SIMPLE IRA balanced fund; and (C) a myRA retirement program administered by the United States Department of the Treasury.

(c) The marketplace shall offer not less than two qualified plan options for the target date fund or other similar fund and not less than two product options for the balanced fund. The options shall include, but need not be limited to: (1) A SIMPLE IRA program or other employer plan that provides for employer contributions to participating enrollee accounts and is approved by the Internal Revenue Service; and (2) a payroll deduction individual retirement account program or workplace-based individual retirement account open to all workers, provided the employer shall not contribute to the employees' accounts.

(d) A range of investment options shall be provided to meet the needs of enrollees with various levels of risk tolerance and ages. The executive director and assistant executive director shall select and approve qualified plan options to be offered in the marketplace and may add or remove such options to best meet the needs of enrollees. The executive director and assistant executive director shall not reject qualified plan options that would otherwise be appropriate in the marketplace based solely on the number of plans already available in the marketplace.

(e) The qualified plans and accounts shall include the option for enrollees to roll pretax contributions into a separate individual retirement account or another eligible retirement plan after ceasing to participate in a qualified plan approved by the Connecticut Small Business Retirement Marketplace.

Sec. 3. (NEW) (Effective from passage) (a) Employee participation in the Connecticut Small Business Retirement Marketplace shall be completely voluntary.

(b) Private sector financial service firms selected by the executive director and assistant executive director to offer qualifying plan options in the marketplace shall not charge enrollees in excess of one hundred basis points in total annual fees, and shall provide such enrollees with information regarding each plan's historical investment performance.

Sec. 4. (NEW) (Effective from passage) The State Treasurer, in consultation with the executive director and assistant executive director, shall adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, necessary to allow the Connecticut Small Business Retirement Marketplace to operate in accordance with the provisions of sections 2 to 7, inclusive, of this act. In adopting such regulations, the Treasurer, executive director and assistant executive director shall consult with organizations representing private sector employers, private sector employees, private and nonprofit sector retirement plan administrators and providers and any other individuals or entities that the director determines relevant to the development of an effective and efficient method for operating the marketplace.

Sec. 5. (NEW) (Effective from passage) The executive director and assistant executive director shall not expose the state, either as an employer or through administration of the Connecticut Small Business Retirement Marketplace, to any potential liability under the federal Employee Retirement Income Security Act of 1974, as amended from time to time. As such, the executive director and assistant executive director are specifically prohibited from offering and operating a state-based retirement plan for businesses or individuals who are not employed in the state.

Sec. 6. (NEW) (Effective from passage) Beginning April 3, 2017, the Connecticut Retirement Security Board shall submit a quarterly report, in accordance with section 11-4a of the general statutes, to the General Assembly detailing the current performance of the marketplace. Such report shall include, but need not limited to, the levels of enrollment and the amount of retirement savings contributed by participating enrollees. Beginning April 1, 2019, such report shall be submitted biannually.

Sec. 7. (NEW) (Effective from passage) If any provision of sections 2 to 6, inclusive, of this act is found to be in conflict with federal requirements that are a prescribed condition to the allocation of federal funds to the state, the conflicting provision shall be inoperative solely to the extent of the conflict and with respect to the agencies directly affected, and this finding shall not affect the operation of the remainder of the provisions of sections 2 to 6, inclusive, of this act in their application to the agencies concerned. Regulations adopted pursuant to section 4 of this act shall meet federal requirements that are a necessary condition to the receipt of federal funds by the state. "

This act shall take effect as follows and shall amend the following sections:

Section 1

from passage

New section

Sec. 2

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Sec. 3

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Sec. 4

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Sec. 5

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Sec. 6

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New section

Sec. 7

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New section