A proposal to create a retirement trust fund for Connecticut residents –at no charge to the state — has been proposed for the second consecutive legislative session.
Lawmakers joined union leaders and activists on Tuesday to rekindle a bill that was defeated last year.
It would be a way for workers with inadequate or non-existent retirement plans to piggyback on state investments that are bringing back double-digit interest for the state’s public-employee and teacher retirement funds.
Sen. Catherine A. Osten, D-Baltic, co-chairman of the Labor and Public Employees Committee, said the nonprofit trust would have an appointed board. Employers would allow portions of paychecks to be deposited directly into accounts, and would have the option to also contribute to employee plans.
“The state of Connecticut has an employee pension fund and a teacher’s retirement fund that is on its way to being more solvent because of the steps that have been taken recently,” Osten said, noting more state contributions to the retirement plans.
She reacted to a reporter’s question indicating that pension plans for unionized state employees and public school teachers have been notoriously under-funded.
“Just because certain administrations going back a good two and three decades did not pay into the pension fund did not mean that the employees did not pay into the pension fund,” Osten said. “This publicly run retirement fund would not require an employer piece to it and therefore it would not have that piece of the problem that has happened,” she said. “It’s not as if we’re planning on the state to pay in money. We’re not. We are not requiring small business to pay into this at all.”
Lori J. Pelletier, president of the state’s 200,000-member AFL-CIO, recalled that over the last 30 years, so-called defined-benefit retirement plans, which 80 percent of companies had offered, have dropped to less than 20 percent.
“Thirty years ago something changed,” she said. “Corporate CEOs decided that that retirement money could be better used in their own pockets and not workers,” Pelletier said. “That upside-down world that we live in has left people out in the cold.”
Salvatore Luciano, executive director of Council 4 of the American Federation of State, County and Municipal Employees, said that the vast majority of the state’s pension under-funding — about $15 billion of the $20-billion shortfall — is for some of the longest-serving state employees.
Luciano said State Treasurer Denise Nappier has been able to realize robust interest rates of 15 percent last year and 13 percent the year before.
“I think pensions are the vehicle you would like to do if you’re going to be in existence for 20 and 30 years like some corporations still do,” Luciano said. “But for a lot of people who may work three or four different jobs and for businesses that don’t know if they’ll be in business in five years, this is the best alternative option.”