A Path to Retirement Savings Cleared for Connecticut Workers

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By Nora Duncan 


The passage of the Connecticut Retirement Security Program by this year’s state legislature has cleared a path to secure financial retirement for more than 600,000 Connecticut residents, including over 60 percent of Hispanics and Latinos. Prior to the new law, those hardworking men and women employed by small businesses were not guaranteed an opportunity for a workplace retirement-savings plan. Now, the path will be paved and the road to a brighter financial future open by 2018. 

AARP has been an advocate for the implementation of such an act for several years and we applaud our elected officials for creating and passing the plan, which adds no additional cost to taxpayers and will lead to less reliance on state-funded social safety net services in the future. 

AARP research discovered four out of five Latinos in Connecticut have less than $10,000 in retirement savings and 69 percent have not started to save at all. At 27, the median age of Hispanic and Latino residents in Connecticut is 15 years younger than the non-Hispanic/Latino population. This law will prove to be a tremendous resource for the future elderly of the community. 

The law was the product of the Connecticut Retirement Security Board (CRSB), created in 2014 by the Connecticut Legislature, and co-chaired by State Comptroller Kevin Lembo and State Treasurer Denise L. Nappier. The CRSB submitted its evidence-based recommendations to the Legislature, which was overwhelmingly in favor of creating a voluntary retirement savings program for private sector workers in the state who are currently without access to a workplace savings plan.  

The bill also had widespread support among Hispanic and Latino legislators, including co-sponsorship from Democratic state representatives Edwin Vargas (Hartford), Ezequiel Santiago (Bridgeport), Robert Sanchez (New Britain) and Juan Candelaria (New Haven). 

The new law will include the formation of a quasi-public/private Connecticut Retirement Security Authority starting on January 1, 2017. The authority will have oversight of the Connecticut retirement security plan, which will begin operation in 2018. The plan will require all Connecticut businesses of five or more employees with no pension or 401K 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, and employers will not be required to match contributions. The default employee-contribution rate for people who do not opt out will be 3 percent 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/vendors for the Roth IRAs will be chosen by an RFP conducted by the authority. Fees charged to individuals by the vendor/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 retirement security program will be funded by the fees from contributions of the employees participating. 

An AARP Public Policy Institute survey of 450 small business owners in Connecticut last year showed that 60 percent of them support private sector workplace retirement-savings programs in Connecticut. In addition, nearly 80 percent of these small business owners agreed that Connecticut officials should be doing more to encourage residents to save for retirement, and reported that they preferred low-cost, voluntary plans that will follow employees from job to job, offering flexibility and security for the employees’ future. 

There has been a lot of debate about the bill and unfortunately, Connecticut residents are being given misinformation by opponents. One such inaccuracy, the state will be able to take, or borrow, from the employee retirement savings accounts. In reality, the state is prohibited by state and federal law from taking or borrowing money from these privately-owned accounts. 

Another common opponent viewpoint is that everyone has an option to save already. However, studies have found workers are 15 times more likely to save for retirement when they have a workplace payroll-deduction option. Fewer than 5 percent of people open an IRA on their own if they don’t have a way to save at work. Savings rates jump to more than 70 percent when there is an employer-sponsored retirement savings plan available and more than 90 percent when automatic enrollment is used. 

Governor Malloy signing the bill into law was the first step towards a fiscally sound future. We are now on our way to enactment and will continue to communicate with everyone as we move forward. 


For more information, or to provide us with feedback, please contact us toll-free at 866-295-7279 or via email at    

Nora Duncan is the state director for AARP Connecticut.  






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