Zawistowski Votes Against Quasi-Public Retirement System

HARTFORD—Legislation that would create a quasi-public retirement savings program for some private sector workers would hurt a financial services sector already reeling from government policies that place Connecticut among the most difficult places to run a business, Rep. Tami Zawistowski said this week.

“Over and over business owners and executives in our state rate ‘predictability’ among the most important characteristics government can offer, and this proposal certainly violates that very basic request,” said Zawistowski, who serves the 61st House District covering Suffield, East Granby and Windsor. “In one move, this bill drops more costly bureaucratic red tape on small business owners while creating state-sponsored competition for financial services companies and small banks.”

Zawistowski on Tuesday voted against H.B. 5591, which would establish the CT Retirement Security Authority—a new quasi-public agency to manage IRAs for roughly 600,000 private sector workers who don’t have access to an employer-provided retirement plan. Companies with five or more employees that don’t offer plans would be required to manage automatic payroll deductions or pay someone else to do it. Workers would be automatically enrolled at a 3 percent contribution rate, but could opt out later. And they’d be restricted to Roth IRAs, ensuring the state would continue to receive revenue as workers are deprived of yearly tax write-offs.

Connecticut’s financial service sector has struggled since the Great Recession, and a recent report on state economic competitiveness shows that those high-paying jobs which are critical to our economy are being replaced by low wage jobs. At the same time, majority party legislators, the governor’s administration, and the state comptroller have pointed to sagging income tax receipts as a driving force behind Connecticut’s budget problems.

“That the state needs this industry to do well is an understatement, yet this legislation is a step toward dismantling it,” Zawistowski said. “This new quasi-public agency would target the very people investment professionals and small community banks target when they’re trying to grow their businesses.”

The “retirement for all” concept has been kicked around legislative committee rooms for five years, though in more expansive forms with bigger price tags for taxpayers. Opponents to Tuesday’s watered-down version of the legislation fear it could be a foothold for unnecessary government bloat. The new agency would have to borrow money to start operations and would pay back the loan using fees assessed to participants, leaving some to worry about what would happen if too few people use the program.

“Pick up any newspaper—our state government is too big, too costly and broken. Yet here we are, blazing a path toward a bigger, more intrusive bureaucracy that hurts our economy,” Zawistowski said. “We should focus on government’s core services, not micro-managing people’s lives.”

The proposal, approved in the House by a 76-63 vote,  awaits consideration in the state senate.