Republicans in Congress are mulling an obscure rule change that could threaten Connecticut's newly established, state-sponsored retirement savings plan.
Last year, the General Assembly in Hartford passed a long-awaited bill that creates a new, state-run retirement system -- not for state workers -- but for private sector employees.
If your employer doesn't offer retirement, they'll be required to give you the option to sign up for the state-administered plan. The idea was to help more than half a million workers in the state who currently have nothing saved, to provide a safety net for themselves, and reduce their dependence on state services.
It's a relatively new way of doing things and Connecticut is one of only about a dozen states which have explored such a system.
But now its future is uncertain.
Under pressure from the financial services industry, the U.S. House of Representatives just passed a repeal of a rule that exempts state-run plans from certain liabilities under federal law.
"It does have the impact of chilling the private market," said State Comptroller Kevin Lembo. He has been the primary driver behind this idea for several years. "We need to rely on private investment companies and insurance companies that want to bid for this business, and be our partners in it. And if this change in the rule changes that relationship, it will be a considerable challenge for the state to stand up a plan."
The rule change has yet to go before the Senate.
Lembo has written to congressional leaders urging them not to make the change, saying an entire generation of workers is headed to retirement financially unequipped.
