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; 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

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

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

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

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

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

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

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

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