Connecticut Faces New Senate-Imposed Regulation On Retirement Plans

May 4, 2017

Connecticut must decide whether to continue with a project to help private sector workers save for retirement, after the U.S. Senate scrapped a rule supporting the plan. Republican senators voted to remove an Obama-era guideline that helped states to administer retirement plans for workers whose employers don't offer the benefit.

Ironically, for an administration that's intent on rolling back regulation, the vote would effectively reinstate more regulations on state-administered plans. The Obama-era rule exempted such programs from the provisions of the federal Employee Retirement Income Security Act, orĀ ERISA, making them easier and more cost effective to provide.

The exemption was heavily opposed by the mutual fund industry.

In Connecticut, the state program hopes to help 600,000 people who don't have access to employer-sponsored retirement. Currently the state is designing a request for proposals from private retirement providers who want to offer plans to those people.

But it must now deal with a potential chilling effect, as those companies learn that they won't have the protections the rule would have provided.

"Republicans are not offering the people of my state any alternative," Senator Chris Murphy said on the floor of the chamber. "All you're doing is robbing from 12 million Americans the ability to get access to retirement. This is a crisis, and if we're not going to deal with it, and the industry's not going to deal with it, let states deal with it. This is a terrible, terrible thing that we are doing."

Connecticut is among a handful of states that have so far moved to address the issue of workers who fail to save for retirement.