Connecticut Gov. Dannel P. Malloy signed the Connecticut Retirement Security Program into law, according to the state General Assembly's website.
The bill was passed by Connecticut's House of Representatives on April 25, and passed by the state Senate on April 30. Mr. Malloy signed the bill May 27.
This follows Mr. Malloy's signing into law in June 2014 legislation to invest $400,000 to establish the creation of a statewide retirement plan open to all private-sector workers.
The Connecticut Retirement Security Board, chaired by the state Treasurer Denise L. Nappier and state Comptroller Kevin Lembo, was responsible for researching and laying the groundwork for creating a state-level individual retirement account open to all private-sector workers.
The new Connecticut Retirement Security Program will include the formation on Jan. 1, 2017, of a quasi-public/private Connecticut Retirement Security Authority. The authority will have oversight of the Connecticut retirement security plan, which will begin operation in 2018.
The program will require all Connecticut businesses of five or more employees with no pension or 401(k) plan option to participate in the retirement security program. It will be voluntary for employees, who will be automatically enrolled but have the ability to opt out. Employers will not be required to match contributions.
Mr. Lembo said in a news release that the financially self-sustaining retirement savings program could serve nearly 600,000 private-sector workers in Connecticut who currently have no access to workplace-based retirement savings.
The default employee contribution rate for people who do not opt out will be 3% of their pay, which will go into a private Roth IRA account that they select from the available vendors. Employees will be able to increase or decrease the contribution rate.
The vendor or vendors for the Roth IRAs will be chosen by an RFP conducted by the Connecticut Retirement Security Authority. Fees charged to individuals by the vendor or vendors selected are capped at 75 basis points.
The authority will have the option in the future to add a traditional IRA plan to the employee choices. The administrative costs of the retirement security program will be funded by the fees from contributions of the employees participating.
