GOP, Business Advocates, Financial Advisors Unite in Opposition to Mandated State Run Retirement Funds

April 28, 2014
Senator Joe Markley speaking at a recent press conference in Hartford at the Capitol opposing a state run retirement fund. Mike Leone of Leone Financial Services in Southington is 2nd from the right.

Senator Joe Markley speaking at a recent press conference in Hartford at the Capitol opposing a state run retirement fund. Mike Leone of Leone Financial Services in Southington is 2nd from the right.

Hartford, CT – Senator Joe Markley (R-Southington) joined by a group of Republican legislative leaders, business advocates and financial advisors like Mike Leone from Southington united in opposition to Senate Bill 249, legislation that would create a state run retirement fund. The proposal would require Connecticut businesses to automatically enroll their employees if they do not offer an alternative of their own.

“It is unreasonable to put employees in the position of having to justify to state government once every two years why they may not want to invest in a new, potentially risky, investment option managed by state government,” said State Senator Joe Markley, ranking senator on the Labor Committee. “The problem is not a lack of investment options. The problem is that people are living paycheck to paycheck and do not have enough money left over to invest in a retirement fund.”

Under the bill proposed in Connecticut, employers required to use the state-run retirement plan would also be required to automatically enroll employees and begin withholding 2% – 5% of their income to be deposited into the state-run retirement fund. An employee who chooses not to participate would have to opt out in writing every two years.

The state-run retirement plan would be managed by the State Comptroller’s Office and a special oversight board. Administrative costs associated with the bill would increase state spending by $8 million.

“There is also an unnecessary cost to the state if this bill were to pass,” said Senator Markley. “This is not a role for government to be undertaking. If our state is ever to prosper, government needs to get out of people’s personal lives.”

The opponents also argued that government should not be undermining private businesses that already offer retirement fund services. Mike Leone from Leone Financial Services in Southington said it best. His small business with 6 employees is a target of this over reaching legislation.

“The regulations in this state aimed at business are like death by a thousand cuts. It is challenging in this economy to stay in business when we are constantly being squeezed. I’m tired of living in fear of my government. If I fill out the form wrong do I face fines? Will I get my license pulled?, asked Mike Leone. “Instead, state government should work with small businesses and the financial sector to educate employees and employers on the benefits of planning ahead for retirement.”

Another provision of the bill requires the state to procure insurance to protect the investments made by plan participants. However, insurance of this nature is costly and does not provide the same level of protection that individuals would receive for investments made with private institutions.

“It is virtually impossible to guarantee a certain rate of return in investment, leaving room for liability problems for the state,” added Sen. Markley.

Opponents of the state run retirement plan also note that no other state has successfully implemented one. California has been trying for over two years and still has not overcome several legal obstacles. Bills in at least ten other states have failed or stalled over legal and practical concerns.