Democratic lawmakers want to make sure private companies offer their employees an opportunity to invest in a retirement plan so they formed the Connecticut Retirement Security Board as part of the state budget.
The concept had been raised as a separate piece of legislation, but with time running out the Democratic-controlled General Assembly decided to include it in a separate bill implementing the state budget. That bill is expected to come up for debate in the House Wednesday.
House Majority Leader Joseph Aresimowicz teamed with Senate Majority Leader Martin Looney this year to push the proposal over the finish line.
The version included in draft budget language is a pared down version of the original bill. Instead of immediately creating a public retirement board and retirement account, it creates a board to study the issue. That board, according to draft language, is expected to conduct a “market feasibility study” and come back to the governor and legislature no later than Jan. 1, 2016 with its recommendations.
Sen. Joseph Markley, R-Southington, said he wasn’t necessarily opposed to studying the issue, but he didn’t believe it belonged in a budget bill.
“As a general policy matter it’s a terrible idea,” Markley said of the decision to introduce the concepts as part of the budget.
He said he would have opposed the budget anyway and would have opposed public retirement accounts if it was a free-standing bill, but is vehemently against the idea of jamming a whole bunch of concepts that didn’t get passed into a bill implementing the budget.
There also is $400,000 allocated to the volunteer board. The money is expected to be used to hire consultants to do the study for the board.
Markley opined that the amount seemed “excessive.”
Republican lawmakers expressed concern about public retirement accounts at the end of April when it won the support of some strong special interest groups like AARP. At that time, Republicans were so concerned that they held a press conference with financial planners to explain how, in their opinion, it would hurt the industry.
“The reality is the private market makes products available to help people invest and make savings for their retirements,” Sen. Minority Leader John McKinney said back in April. “They’ve been doing it for a very long time. They can do it better than the government can do it.”
Democratic lawmakers disagreed. Looney cites the more than 600,000 Connecticut residents whose only retirement savings will come from Social Security. He said it’s the right thing to do to help residents find a way to invest and studies show people are more likely to invest when the money is taken through a payroll deduction.
Sen. Gary Holder-Winfield, D-New Haven, has said that at some point people who haven’t saved anything for their retirement will end up coming to the state for assistance. He said the concept is fiscally responsible because it may make people less dependent on state government for help.