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Comptroller Seeking Rewrite of Deferred Compensation Program

Contact: Bob King
860-703-3311 or 860-702-3300

In a continuing effort to open up the process of awarding contracts to companies that service state employees, Comptroller Nancy Wyman issued a request for proposal today for a new administrator of deferred compensation programs for state employees.

The RPF calls for a complete redesign of the program to lower administrative costs and improve investment opportunities.

"Our deferred compensation opportunities for state employees need to be examined in terms of both their efficiency and their return on investment," said Wyman. "I hope to end up with a package that will encourage more state employees to plan for their retirement years."

Wyman was acting on recommendations made by a task force she named last February. The task force, headed by former State Sen. Michael P. Meotti, studied programs in other states and recommended that a new administrator be hired to design a plan with better investment options, as most other states have done in recent years. The task force's report echoed a recent state auditors' report.

The administrator is expected to be hired by April and changes are expected to be in force by July 1, 1997. Administrative costs of the program are paid by enrolled state employees and not taxpayers.

Deferred compensation allows employees to deduct part of their earnings and invest the funds in a pre-tax account for retirement. As of last June, 18,143 state workers had a total of $411.9 million invested in deferred compensation accounts.

Wyman said she is also pursuing a legislative change that would allow state workers to invest their savings directly into mutual funds. Currently, all such investments must be wrapped in annuities, which have separate administrative fees.

For Immediate Release
January 3, 1997

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