Connecticut Businesses Face March 30 Deadline to Comply With Retirement Savings Law

by Hugh McQuaid

Thousands of Connecticut businesses were potentially out of compliance with a public retirement savings program on Thursday, just one week before a March 30 deadline to enroll, according to the state Comptroller Sean Scanlon.

Scanlon held a press conference to promote the MyCTSavings and its looming deadline at the state Capitol building in Hartford. He was flanked by sympathetic business owners and members of the state AARP, who praised the mandatory savings plan.

“We’re here today to remind the people of Connecticut that if you have a business with five or more employees, you have got to go to MyCTSavings.com and either verify that you offer a retirement plan for your employees, in which case you’re all set, or if you don’t … we will work with you to make sure you are going through a very quick and very easy process,” Scanlon said.

The program is free for employers and is designed to automatically enroll private sector workers in a Roth IRA retirement savings plan if they are not already participating in a plan through their employers. Although workers can opt out of the plan if they do not wish to participate, the initiative is built around the idea that workers are more likely to save for retirement if they are automatically enrolled in a savings plan.

Tim Ryan, a CPA who is the AARP’s lead volunteer on the program, said that studies have found workers between 15 and 20 times more likely to save if their retirement plans are funded through payroll deductions or they are automatically enrolled in the program.

“My message to the employers are: comply with the requirements of this program, please,” Ryan said.

However, according to the comptroller’s office, most employers have not. At this stage, just how many businesses are out of compliance is a little difficult to nail down. That’s because the requirement does not apply to employers who already offer retirement plans and it’s unclear how many do.

After Scanlon was sworn in as comptroller in January, his office sent letters to around 22,000 small businesses — a guess based on federal tax filings — that they believed may not offer plans. Around two-thirds of those employers have yet to respond, according to his office.

Although they have until next Thursday to do so, Scanlon acknowledged there was little penalty for businesses who fail to comply. State law requires employers with five or more workers to either enroll in the program or offer their own. That means the comptroller could sue businesses who offer neither.

However, Scanlon said he would not be suing Connecticut businesses over the savings program.

“I’m not taking any small businesses to court. I was raised by a small business owner,” Scanlon said. “I’m trying to lead by doing creative things like going to learn how a … cupcake is made. I got a pizza at a place in Hartford the other day. I’m going to try to keep getting out there.”

Scanlon spent much of mid-March at lo- cal businesses across the state doing press events aimed at publicizing the program.

Some of those business owners, like Carrie Carella of NoRa Cupcake Company in

Middletown, attended Thursday’s press conference.

“Over half of my staff is participating,” Carrella said. She said most of her employees were young and not otherwise thinking about retirement savings. “They’re excited that they now have a future plan and they don’t have to get ‘real job,’ like a corporate job and still make cupcakes.”

But while Thursday’s event was designed to alert businesses of the deadline and gently coax them to participate in the program, policymakers have advanced a proposal to equip Scanlon with punitive capabilities in the event that they do not.

Last month, the legislature’s Labor Committee advanced a bill that would, among other things, enable the comptroller’s office to fine businesses that do not comply. It was opposed by the panel’s Republicans.

“We’re going to give the comptroller the power to penalize employers for failing to follow a program which is in its infancy and it does not have a good track record so far,” Sen. Rob Sampson, R-Wolcott, said. “I think these are dangerous things.” Scanlon argued Thursday that the bill made sense.

“We want to give business owners a chance and a second chance and a third chance but at some point if they’re not complying we do have to make sure we’re doing something to compel them to be a part of this,” Scanlon said. “But we’re just, right now, focussing on the next seven days.”