STATE OF CONNECTICUT
RETIREMENT SECURITY BOARD
State Comptroller Kevin Lembo
State Treasurer Denise Nappier
John A. Sayour
Public Act 14-217 Signed by Governor Malloy on 6/13/14
Section 180-185 regarding the establishment of the Connecticut Retirement Security Board Sec. 180. (NEW) (Effective July 1, 2014) As used in this section and sections 181 to 185, inclusive, of this act:
(1) "Individual retirement account" means a Roth IRA, an individual retirement account or individual retirement annuity established in accordance with Section 408(a) or (b) of the Internal Revenue Code;
(2) "Internal Revenue Code" means the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time;
(3) "Plan participant" means any eligible employee who maintains an individual retirement account pursuant to the plan;
(4) "Public retirement plan" or "plan" means a retirement plan designed by the Connecticut Retirement Security Board;
(5) "Qualified employer" means any person, corporation, limited liability company, firm, partnership, voluntary association, joint stock association or other entity that employs five or more persons in the state. "Qualified employer" does not include: (A) The federal government, (B) the state or any political subdivision thereof, or (C) any municipality, unit of a municipality or municipal housing authority; and
(6) "Vendor" means (A) a regulated investment company or an insurance company conducting business in the state, or (B) a company conducting business in the state to (i) provide payroll or recordkeeping services, and (ii) offer retirement plans or payroll deposit individual retirement account arrangements using products of regulated investment companies. "Vendor" does not include individual registered representatives, brokers, financial planners or agents.
Sec. 181. (NEW) (Effective July 1, 2014) (a) There is established the Connecticut Retirement Security Board that shall conduct a market feasibility study regarding the implementation of the public retirement plan and develop a comprehensive proposal for the implementation of such plan.
(b) Notwithstanding the provisions of section 4-9a of the general statutes, the board shall consist of the following members:
(1) One appointed by the president pro tempore of the Senate, who shall be an expert on retirement plan designs and who shall serve an initial term of four years;
(2) One appointed by the speaker of the House of Representatives, who shall represent an organization whose principal purpose is advocacy for seniors and who shall serve an initial term of four years;
(3) One appointed by the majority leader of the Senate, who shall be an organized labor representative and who shall serve an initial term of four years;
(4) One appointed by the majority leader of the House of Representatives, who shall be an individual who manages employee retirement plan options in the private sector and who shall serve an initial term of four years;
(5) One appointed by the minority leader of the Senate, who shall have expertise in designing retirement plan options for businesses and who shall serve an initial term of three years;
(6) One appointed by the minority leader of the House of Representatives, who shall be an individual with expertise in consumer retirement planning and who shall serve an initial term of three years;
(7) Two appointed by the Governor, one of whom shall be a plan participant or potential plan participant and one of whom shall have expertise regarding the federal Employment Retirement Income Security Act of 1974 or the Internal Revenue Code, or both, both of whom shall serve an initial term of three years;
(8) One appointed by the State Comptroller and one appointed by the State Treasurer, both of whom shall be experienced in matters relating to investments and both of whom shall serve an initial term of three years;
(9) The State Comptroller, or the Comptroller's designee;
(10) The State Treasurer, or the Treasurer's designee;
(11) The Labor Commissioner, or the commissioner's designee; and
(12) The Secretary of the Office of Policy and Management, or the secretary's designee.
(c) All appointments to the board shall be made not later than July 31, 2014. Following the expiration of their initial terms, subsequent members appointed by the Governor and members of the General Assembly shall serve three-year terms. Any vacancy shall be filled by the appointing authority not later than thirty calendar days after the office becomes vacant. Any member previously appointed to the board may be reappointed.
(d) The State Comptroller and the State Treasurer shall serve as chairpersons of the board. Said chairpersons shall schedule the first meeting of the board, which shall be held not later than forty calendar days after the effective date of this section. The board shall meet at least monthly.
(e) The members shall serve without compensation but shall, within available appropriations, be reimbursed in accordance with the standard travel regulations for all necessary expenses that they may incur through service on the board.
(f) Each member shall, not later than ten calendar days after appointment, take an oath of office that so far as it devolves upon the member, the member will diligently and honestly administer the affairs of the board, and will not knowingly violate or willingly permit to be violated any of the provisions of law applicable to the establishment of the plan. Each member's term shall begin from the date the member takes such an oath. The oath shall be administered by a chairperson of the board.
(g) Each member shall be entitled to one vote on the board. A majority of the members that have been appointed to the board shall constitute a quorum for the transaction of any business, the exercise of any power or the performance of any duty authorized or imposed by law.
(h) The board shall be within the office of the State Comptroller for administrative purposes only.
(i) The board may:
(1) Enter into one or more contractual agreements, as necessary, including contracts for legal, actuarial, accounting, custodial, advisory, management, administrative, advertising, marketing and consulting services and pay for such services using funds deposited in an account established by the State Comptroller pursuant to section 183 of this act; and
(2) Form working groups, as necessary, to solicit feedback from key stakeholders on the design of the plan, advocate for changes in federal retirement law to improve retirement security, assess the impact of the plan on reducing public assistance costs for the elderly in the state and determine if changes in federal or state tax law would help employees in the state save for retirement.
Sec. 182. (NEW) (Effective July 1, 2014) Each member of the Connecticut Retirement Security Board shall file, with the board and the Office of State Ethics, a statement of financial interests, as described in section 1-83 of the general statutes. Such statement shall be a public record.
Sec. 183. (NEW) (Effective July 1, 2014) The Connecticut Retirement Security Board may accept and receive any bequest, devise or gift of money or personal property, and may hold and use such money or property for the purposes, if any, specified in connection with such bequest, devise or gift. The board may apply for grants or financial assistance from any person, group of persons or corporation or from any agency of the state or of the United States. Any such grants or financial assistance shall be deposited in an account established by the State Comptroller as a separate, nonlapsing account within the General Fund, and shall be utilized to support the activities of the board as set forth in sections 181 to 185, inclusive.
Sec. 184. (Effective July 1, 2014) (a) The Connecticut Retirement Security Board shall conduct a market feasibility study to (1) determine whether the goals and design features of the plan, as described in section 185 of this act, may be accomplished, and (2) recommend methods by which such goals and design features shall be accomplished. Such market feasibility study shall examine: (A) Likely participation rates, (B) contribution levels, (C) rate of account closures and rollovers, (D) ability to provide employers with a payroll deposit system for remitting contributions from employees, (E) funding options for implementation of the plan, (F) likely insurance costs and whether such costs should be subject to the limit on annual administrative expenses pursuant to subdivision (7) of subsection (a) of section 185 of this act, and (G) legal compliance necessary to ensure the individual retirement accounts qualify for the favorable federal income tax treatment ordinarily accorded to individual retirement accounts under the Internal Revenue Code, and that the public retirement plan is not treated as an employee benefit plan under the federal Employee Retirement Income Security Act of 1974.
(b) Not later than May 1, 2015, the board shall submit, in accordance with the provisions of section 11-4a of the general statutes, a report on the status of such market feasibility study to the Governor and to the joint standing committee of the General Assembly having cognizance of matters relating to labor and public employees.
(c) Not later than January 1, 2016, the board shall submit, in accordance with the provisions of section 11-4a of the general statutes, a report describing the results of the market feasibility study to the Governor and to the joint standing committee of the General Assembly having cognizance of matters relating to labor and public employees.
Sec. 185. (NEW) (Effective July 1, 2014) (a) After completion of the market feasibility study conducted pursuant to section 184 of this act, the Connecticut Retirement Security Board shall, in consultation with qualified employers, potential plan participants, representatives of the financial services sector and other stakeholders, develop a comprehensive proposal for the implementation of the plan. Such comprehensive proposal shall include, but not be limited to, the following goals and design features:
(1) An increase in access to and enrollment in quality retirement plans without incurring debts or liabilities to the state;
(2) A reduced need for public assistance through a system of prefunded retirement income;
(3) A minimal need for financial sophistication in plan participants;
(4) The promotion of transparency and accountability in the management of the retirement funds through oversight, regular reporting to plan participants and ethics review of plan fiduciaries;
(5) The payment of all expenses, including employee costs, incurred to implement, maintain, advertise and administer the plan, from moneys collected by or for the trust;
(6) Plan portability through maintenance of individual retirement accounts for each plan participant;
(7) Low administrative costs that shall be limited to an annual, predetermined percentage of the total plan balance;
(8) The provision of an annuitized benefit with options for conversion to lump-sum payout upon retirement, spousal benefit and preretirement death benefits to enable a plan participant to bequeath assets to designated beneficiaries;
(9) An annually predetermined guaranteed rate of return and the procurement of insurance, as necessary, to guarantee the stated rate of return;
(10) Implementation of a default contribution rate and a process by which plan participants may elect to change their level of contribution;
(11) Compliance with all applicable requirements of federal and state laws, rules and regulations;
(12) Ensuring that the plan participants and the individual retirement accounts qualify for the favorable federal income tax treatment ordinarily accorded to individual retirement accounts under the Internal Revenue Code;
(13) Ensuring that the plan is not treated as an employee benefit plan under the federal Employee Retirement Income Security Act of 1974;
(14) A process to determine the eligibility of an employer, employee or any other individual to participate in the plan and to ensure mandatory participation by any qualified employer that does not offer an employer-sponsored retirement plan to its employees;
(15) A process by which a qualified employer shall credit the plan participant's contributions to his or her individual retirement account through payroll deposit;
(16) Employer immunity with regard to investment returns, plan design and retirement income paid to plan participants;
(17) A process for streamlined enrollment of potential plan participants, including automatic enrollment of each employee unless the employee chooses to opt out of participating in the plan;
(18) The dissemination of educational information concerning saving and planning for retirement to potential plan participants;
(19) The establishment of a secure Internet web site to assist qualified employers in identifying vendors of retirement arrangements that may be implemented by qualified employers in lieu of participation in the plan;
(20) Legal enforcement of employer obligations arising under the plan;
(21) Ensuring that any assets held for the plan shall be used for the purpose of distributing individual retirement savings balances to the plan participants and paying the operational, administrative and investment costs associated with the plan;
(22) Ensuring that any amounts on deposit to be utilized in the plan shall not (A) constitute property of the state and the plan shall not be construed to be a department, institution or agency of the state, and (B) be commingled with state funds and the state shall have no claim to or against, or interest in, such funds;
(23) Ensuring that any contract entered into by or any obligation of the plan shall not constitute a debt or obligation of the state and the state shall have no obligation to any designated beneficiary or any other person on account of the plan and all amounts obligated to be paid pursuant to the plan shall be limited to amounts available for such obligation;
(24) Ensuring that the plan shall continue in existence as long as it holds any deposits or has any obligations and until its existence is terminated by law and upon termination any unclaimed assets shall return to the state; and
(25) Ensuring that the property utilized in the plan shall be governed by section 3-61a of the general statutes.
(b) Not later than April 1, 2016, the board shall submit the comprehensive proposal, in accordance with the provisions of section 11-4a of the general statutes, to the General Assembly and to the Governor, the president pro tempore of the Senate and the speaker of the House of Representatives.
MARKET FEASIBILITY STUDY
REPORT TO LEGISLATURE
COMPLETED REQUESTS FOR PROPOSAL & INFORMATION:
RECEIVED PUBLIC COMMENTS