By Adam Chiara CTLatinoNews.com
Less than half of U.S. Latino workers have retirement plans as a benefit of their job, leaving most with no savings for their golden years, according to a report by the National Institute of Retirement Security (NIRS).
The Connecticut Legislature has a proposed bill which could help to remedy this. S.B. 249 creates a state-administered retirement savings plan for low-income private sector workers.
The state would create the Connecticut Retirement Security Trust Fund, which would be a low-cost retirement savings plan without increasing costs to employers. There would also be a payroll deduction component involved.
“It’s a payroll deduction so it doesn’t require the individual to write a check or anything,” Sen. Andres Ayala, D-Bridgeport, said. “It’s automatic.”
Ayala is the co-chair of the Legislature’s Aging Committee and has heard testimony on how seniors are living in destitute circumstances because they were not adequately prepared for retirement.
“This is for folks in their golden years to have something on the side to live on and improve their quality of life,” Ayala said.
The study conducted by NIRS also showed that Hispanics are much less likely than whites to have defined-benefit pensions, especially outside of public sector jobs. S.B. 249, An Act Promoting Retirement Savings, would address this by having employers with five or more employees utilize the state’s new trust fund.
The bill is written to have the state work with employers to set-up payroll deduction. This is because legislators believe this method will have a higher success rate as opposed to having individuals fund their own individual accounts on a schedule set by them.
“Unless there are payroll deduction plans offered, the level of participation is very low,” Senate Majority Leader Martin Looney said.
While proponents of the bill claim this would not add any additional costs to employers, opposition to S.B. 249, including from the National Federation of Individual Business (NFIB), indicates this would force an administrative burden on businesses. There is also the concern for the possible violations small business could face if they do not comply with the new law.
“This is simply not the time for the state to create a new plan for private sector employees, much less one which guarantees a set rate of return on investments,” NFIB said in public testimony.
The bill passed overwhelming in the Labor and Public Employees Committee on Tuesday with a seven to three vote. This allows the measure to move forward in the legislative process.
More information on the bill can be found here.