Senate Republicans Unanimously Oppose Sen. Williams’ State-Sponsored Retirement Plan

April 24, 2008

Lack of detail leaves too many unanswered questions about cost, legality and workability

Hartford, CT – State Senate Minority Leader Pro Tempore Leonard Fasano (R-North Haven) and State Senator Dan Debicella (R-Shelton) today led opposition to Senate President Don Williams’ proposal to establish a state-sponsored retirement plan for small and medium sized businesses. Senators Fasano and Debicella said the one-paragraph bill was brought to the floor of the Senate prematurely and its lack of detail raised several unanswered questions regarding cost, legality, and workability. The bill, SB 399, passed the Senate 22-11 on a party-line vote.

“As written this bill provides no incentive for employers to enroll in a state-run pension system. Proponents do not have clear answers as to the proposal’s legality, potential employer liabilities or cost,” said Senator Fasano. “This is a classic case of a solution in search of a problem. There is significant opposition from the business community, including many of the small businesses this bill purports to help. That’s why we are saying take a step back, listen to all sides, and craft a proposal that will truly help small businesses and their employees. The jury is still out as to whether or not Senator Williams’ proposal would do either.”

The Senators said the bill leaves too much to chance by seeding all authority to the Comptroller to decide who will manage the plan, what the plan will consist of and how it will be administered. The Senators said a more responsible course of action would be to commission a thorough study of potential state-sponsored retirement plans and draft a bill with legislative language that can be immediately administered to help small businesses and their employees.

Senator Debicella, ranking member on the General Assembly’s Commerce Committee said, “While well-intentioned, Senator Williams’ bill is half-baked legislation. There are three major unanswered questions that no proponent– not Senator Williams, not the Comptroller, not any Senate Democrat – can answer. First, the bill might be illegal under the federal ERISA law, as Maryland and Washington seem to think. Second, the potential savings are based on a faulty assumption that we can leverage existing contracts to force new vendors to cut their rates. Third, private industry finds signing up tens of thousands of small businesses with disparate IT systems to be cost prohibitive– but somehow Senator Williams thinks government can do this with just $500,000 in newspaper advertising.”

“We have identified the right problem, but the wrong solution,” said Senator Debicella. “A large new government bureaucracy is not the solution to expanding 401(k) enrollment. Offering additional tax incentives for savings and enabling private industry to better reach small business is a more cost-efficient and effective approach.”