|By Johanna Somers, The Day, New London, Conn.|
|McClatchy-Tribune Information Services|
Employers would be required to offer the plan, but employees could choose to opt out. Opponents said low-cost retirement plans already exist in the private sector and that small business financial advisers could lose clients and essentially jobs. Proponents said that the private market hasn't reached 700,000 low-income workers and therefore a state-administered plan would offer them a low-cost way to save for their future.
"What people are trying to sell here is that you can't get a retirement account in the real world or, if you could, it would cost you too much," said state Sen.
The state-run account would be called the
The retirement trust would not be open for enrollment until the
ERISA was designed to protect retirees in private-sector retirement plans. It requires companies offering these plans to provide information about the plans and places fiduciary responsibilities on those who manage and control the financial assets in the plan. It gives plan participants or retirees the ability to sue for benefits and breaches of fiduciary duty and guarantees payment of a certain level of benefits through the
Several Republicans said if there was going to be a bill at all this legislative session about state-administered retirement for private workers, it needed to be a study bill because so many questions remain unanswered.
"Can this bill be legal?" said state Sen.
After the press conference, Democrats said implementation of the state-run retirement plan wouldn't happen until after the ERISA question was answered and that they wouldn't be offering it if the private industry's plans were working.
"Since the private entities are not successfully pursuing this market, small employers sometimes claim that the fees are too high and that it is counterproductive for them to accept the offerings that are out there, therefore, we are following the model of
Several studies have shown that people save regularly only if there is a payroll deduction option, Looney said.
Republicans and financial advisers at the press conference said they were concerned that the costs of the state-administered plan would fall on the backs of low-income workers.
"Frankly, I think it is a piece of legislation that we are pandering to the low-income earners at the expense of their own paychecks," said
"With this bill, the layer of paid professionals hired to create the retirement plan will be on the backs of the low-income participants," Feller said.
"The 401(k) is really squeezing workers so the shareholders and the CEOs are making money off the working people," Luciano said. "… People are hard-working; they don't know how to invest, you know a 20-year-old doesn't know how to invest, but a pension fund manager, that is what they are paid for, that is their expertise," Luciano said.
The bill will likely be sent to the Appropriations Committee for revisions and has support in the
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