HARTFORD, CT — The U.S. Senate voted 50-49 Wednesday to overturn an Obama-era rule designed to help states create retirement saving programs.
Last year, Connecticut voted to move forward with setting up a public retirement system for all Connecticut residents. It asked every employer with more than five employees to deduct three percent of an employee’s’ paycheck to deposit into the fund. About 600,000 Connecticut residents, who don’t have employer-sponsored retirement saving plans, could have benefited from the legislation, according to proponents.
Connecticut was one of a handful of seven states to set up this type of program.
“I’m very disappointed to see that the U.S. Senate, on an unusual 50-49 vote, has attempted to derail a program intended to help working families save for retirement,” House Speaker Joe Aresimowicz, D-Berlin, said. “It is a shame that the interests of Wall Street are being put ahead of the 600,000 private sector workers in Connecticut who would benefit from our landmark public retirement security plan, as well as the other 55 million Americans who are trying to save for retirement.”
Senate President Martin Looney, D-New Haven, who along with Aresimowicz championed the legislation, said “Republicans are standing directly in the way of financially secure futures for hundreds of thousands of Connecticut residents. Helping private sector workers save their own money for retirement is a sustainable commonsense solution to people from falling into poverty once they reach retirement age and may be entirely reliant on social security benefits.”
Congressional Republicans said the state programs would discourage small business owners from offering their own private retirement plans.
State Comptroller Kevin Lembo, who co-chaired the board looking to establish a public retirement system, said workers covered under Connecticut’s plan have no other access to a workplace retirement savings program.
However, Lembo said he believes the state can still move forward with its plan. While the U.S. Department of Labor rule clarified the situation, he believes the Connecticut program can proceed without the federal clarifying rule, according to national experts consulted as the program was being developed.
“This action by U.S. Senate Republicans is bad for workers, bad for business, bad for our economy — but it’s good for big financial institutions that do not provide workers with the retirement plans they need and don’t want anyone else to do it either,” Lembo said.
U.S. Sen. Chris Murphy, who voted against repealing the rule, said there is a “retirement savings crisis in this country, and Republicans just ripped away states’ ability to try to do something about it.”
Shortly after the Senate action, Murphy and U.S. Sen. Martin Heinrich of New Mexico introduced legislation that would allow states to establish their own public retirement programs.
The PROSPERS Act would ensure that states and cities can continue to create retirement savings programs for workers in the private sector and help them save for retirement.