According to a wide-ranging survey by AARP Research, a large majority of Connecticut voters age 50 and older indicated the candidates’ positions on implementing the Connecticut Retirement Security Program (CRSP) will be important as they cast their votes in the 2018 election. The survey is part of AARP’s “Be The Difference. Vote.™” campaign and continues AARP’s long tradition of nonpartisan voter engagement.
Opponents, including the CT Business and Industry Association, use misleading claims to undermine the successful implementation of the CRSP, which passed in 2016. Meanwhile, 77 percent of the respondents, 69 percent of whom self-identified as leaning moderate or conservative, consider it important for elected officials to work on helping more Connecticut workers grow their retirement savings through full implementation of CRSP.
The CRSP is built on statistics from the Boston College Center for Retirement Research that shows Americans face a $7 trillion retirement savings deficit. That is the difference between what people have saved and what they need to save for retirement. We know that less than 5 percent of people walk into a bank and open an IRA account, yet that number increases by 15 times if offered the ability to save through automatic payroll deduction.
Let’s be clear about the responsibilities of businesses in Connecticut under the new law. It does not apply to businesses that already offer a pension, 401K, or other retirement savings vehicle. Businesses with five or more employees that don’t have a retirement savings option must offer the employee the opportunity to participate in the new program or any other qualified retirement savings option they choose.
Employers will not be responsible for “selling” participation to their employees. Employers are only required to distribute provided materials about the retirement savings option to their employees. They must transmit employee savings contributions to the vendor selected by the employee. This will be no different than any other payroll withholding a business is already responsible for, such as Social Security, FICA, healthcare, etc.
Employers who do not offer retirement plans in the workplace due to a lack of adequate resources to manage such plans, or a lack of ability to access a plan that does not eat up the employee savings in exorbitant fees, will now have the ability to do so. The truth is that there will be little if any cost to a business for any aspect of this program and the ability to offer a savings program is likely to make businesses more competitive with neighboring states, not less.
Employees will have the ability to opt out of this voluntary program. If they choose to participate, they can select the percentage of their pay that they want to save. The default rate is 3 percent, however employees can increase or decrease that amount based personal choice and the limits in effect under federal rules established for all Roth IRA accounts.
The CRSP is a conservative approach to solve an impending retirement savings disaster. Several states are already implementing similar plans, without partisan or business opposition. The CRSP will help alleviate Connecticut’s fiscal problems by helping to better prepare residents for retirement through a partnership with private investors and businesses. If we can get residents to save at least $1,000 a year over 10 years, the state can save over $90 million in social services programs.
Retirement security is fundamental to Connecticut’s economy and the CRSP is a 2018 election issue that is supported by our largest and most consistent voting bloc — the age 50+ voter. It would be a mistake for candidates to brush it off or rely on opponents for misleading talking points.
Nora Duncan is state director of AARP Connecticut.
AARP, which is included among the sponsors of this website, is a nonprofit, nonpartisan organization that helps people 50 and older improve the quality of their lives, with offices in every state as well as Washington, D.C., Puerto Rico, and the U.S. Virgin Islands.
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