ASPPA Responds to the Connecticut Retirement Security Board
In the letter, the three sister organizations recommend that the state-run plan be structured as an automatic enrollment IRA arrangement similar to federal auto-IRA legislation
and the Obama Administration’s auto-IRA proposal. The key feature of these proposals is a requirement that employers with 10 or more employees offer an auto-IRA arrangement only if those employers chose not to sponsor any other type of private retirement plan for their eligible employees or exclude a substantial portion of the employer’s workforce from participation in a plan.
ASPPA, NAPA and NTSA recommend in the letter that the default contribution level for a participant under the state-run plan be at least 3% of a participant’s compensation, with an automatic escalation feature that would increase a participant’s contributions over time to a maximum of 15% of compensation. In addition, they suggest that the state-run plan needs to ensure the portability of these benefits by allowing participants to transfer their assets directly to another retirement savings vehicle at any time.
The legislation that established the CRSB also directed the CRSB to establish an online clearinghouse where qualified employers will be able to identify private sector providers that are offering retirement products that will fulfill the qualified employer’s obligations under the law. ASPPA, NAPA and NTSA told the CRSB that the private sector is eager and willing to participate in providing retirement plan solutions for businesses that currently do not offer retirement plans, and that this online clearinghouse is an efficient distribution tool for these private sector companies to use.
ASPPA, NAPA and NTSA believe that the retirement plan industry cannot afford to sit on the sidelines on this issue. Participating in this process allows our organizations to have a seat at the table and offer constructive solutions to address the retirement plan coverage gap. We think the most effective solution is the requirement for employers above a certain size to offer a retirement plan for their employees because we know that access to an employer-sponsored plan drives savings. We will continue to repeat that message to the CRSB during their public hearing on these comments on Nov. 19, 2014.
Andrew Remo is the Congressional Affairs Manager at ASPPA and NAPA.