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Connecticut Retirement Security Board

Connecticut Retirement Security Board. Explanation of Draft Connecticut Work and Save Program Legislation February 4, 2015. Coverage. “Qualified Employers” subject to participation mandate. § 3(k) 5 or more employees; Does business in Connecticut;

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Connecticut Retirement Security Board

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  1. Connecticut Retirement Security Board Explanation of Draft Connecticut Work and Save Program Legislation February 4, 2015

  2. Coverage • “Qualified Employers” subject to participation mandate. § 3(k) • 5 or more employees; • Does business in Connecticut; • Has been in business since at least the start of the previous year; and • Does not include the state or federal government. • Other employers may elect to participate (Authority creates guidelines). § 9(c) 2

  3. Coverage • “Covered Employees” must be allowed to participate. § 3(f) • Age 18 or older; • Works in Connecticut and would be eligible for unemployment compensation; • Has been employed at Qualified Employer for at least 4 months; and • Cannot participate in a retirement plan at work. • Includes long-time part-time workers who are not eligible because they do not work full time. • Others may elect to sign up (Authority creates guidelines). § 9(d) 3

  4. Enrollment • Authority provides for establishment of IRAs. § 7(a) • Qualified Employer must enroll Covered Employees. § 9(b) • Employees may choose • To opt out. § 9(a)(3). • Percentage of wages to contribute. §3(e) • Whether to use Traditional or Roth IRA. § 7(a) 4

  5. Investments • Authority selects target date fund or another option for investment of Employees’ contributions. § 10 • Authority may select lifetime income investment (e.g., annuity contract) for Employees who reach retirement age. § 11(b)(1) • May require that a certain percentage of retirees’ account balance be invested in lifetime income option. § 11(b)(3) 5

  6. Disclosures to Employees • At time of enrollment (§6(a)) • Benefits and risks of participation • Employees’ rights (including to opt out) • Quarterly: Account balance and fees charged. §6(b) • Annually: Information on program investments and fees that may be imposed. §6(c) • Before retirement: Information on lifetime income options (if any) • Authority may provide additional educational information and create rules on sending disclosures electronically. §6(d), (e) 6

  7. Enforcement of Program Rules • Attorney General to investigate and enforce Board and Staff’s compliance with fiduciary duty requirements. § 12(a) • Employers must remit Covered Employees’ contributions in a reasonable amount of time. Failure enforced through wage theft laws. § 12(b) • Additional enforcement mechanism for Qualified Employees who fail to enroll Covered Employees TBD. 7

  8. Management • “Connecticut Work and Save Program” • Proposed as a quasi-public entity, but could be a state agency like the Retirement Board or a responsibility of an officer, like CHET. § 17 • Run by Board of Directors • [7] members, including Treasurer, Comptroller, and others appointed by Governor. § 4(a) • May appoint Executive Director, staff, and service providers. §§ 4(b); 5(8) • Subject to fiduciary standard of care and conflict of interest provisions. §§ 4(h); 8(a) 8

  9. Management (cont.) • Quasi has cons • No enforcement powers • Information sharing with other agencies may be constrained by confidentiality provisions • Quasi has pros • Independent budgeting • Possible perception benefits • Clearer limitation of state liability

  10. Other Considerations • Authority to report on its activities annually to Governor, Auditors of Public Accounts, and General Assembly. § 14 • Authority may study the feasibility of making retirement plans other than IRAs available (e.g., 401(k); defined benefit plan). § 13 10

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