ASPPA opposed Connecticut 401 (k) Legislation

 

Thursday, Mar 05,2009, 4:51:06 PM   Click:

Arlington, Va.-The American Society of Pension Professionals & Actuaries (ASPPA) and the Council of CIS 401 (k) record keeping (CIKR) expressed its opposition to a bill in the Senate in Connecticut, SB 971, which allow the State of Connecticut to sponsor a 401 (k) for small businesses. The Small Business Council of America (SBCA) joined ASPPA and CIKR in opposition to the legislation. ASPPA, SBCA and CIKR opposed similar legislation last year in Connecticut, who filed the legislature.

Brian Graff, ASPPA executive director and CEO, said that although the legislation in May to be well intentioned, is a very bad idea. "We oppose SB 971 because the bill is not likely to expand pension coverage for employees of small businesses, in May, he is doing more harm than good," says Graff.

In his testimony to the Committee on Senate Commerce, Graff noted that, as Connecticut, a number of other states have considered or not administered by the State 401 (k) are a viable option for increasing the retirement of their citizens - and each state has rejected this approach. Graff said the recent report of the State of Washington, rejecting the idea of administering a 401 (k) for employees of small enterprises and the private sector instead of recommending the administration of retirement accounts Individual (IRA), or a payroll deduction IRA. The reasons given by the State of Washington to avoid the state 401 (k) programs include responsibility and cost of compliance with ERISA. Officials of the State of Washington, said an initial start-up cost of $ 3.4 million in the first two years - and the ongoing costs of $ 2 million per year.

ASPPA, CIKR, SBCA and support proposals to extend the coverage of the Employees Retirement System of small businesses. For example, Graff describes the support of a federal tax credit, passed in 2001, which provides small businesses with up to $ 500 annual tax credit for the costs of starting a new small business retirement.

In his testimony, Graff has listed a number of reasons why the groups believe it represents a state-sponsored 401 (k) plan administered by Connecticut would be a bad idea. For example, Graff said that these plans will be subject to the Employee Retirement Income Security Act of 1974 (ERISA), which governs the administration and maintenance of all employer-sponsored retirement plans. If ERISA does not apply to plans for state employees, it would apply to 401 (k) plans maintained by the state as proposed in SB 971. Given the specific compliance requirements on retirement plans, the conditions of ERISA would be extremely complicated, expensive, and time.

Graff also noted that the low cost pension Connecticut for already existing on the market today. For example, Congress established Savings Incentive Match Plan for Employees IRA, which are exempt from ERISA and therefore have a minimum of administrative costs for small employers who do not want the cost or responsibility of a real pattern 401 (k) plan. If a small business employer does not want to establish a retirement plan, it is generally because the employer is not familiar with the options available, or the employer does not want the commitment to contribute to plan for employees of each year. Connecticut law does not address the problem, either.

ASPPA is a national organization of more than 6,500 pension plans to provide professional advice and administrative services for retirement plans covering millions of American workers. ASPPA members are retirement professionals of all disciplines including consultants, administrators, actuaries, accountants and lawyers. The broad membership gives an unusual insight into the current problems with the employee Retirement Income Security Act and qualified retirement plans with special emphasis on problems encountered by small and medium enterprises. ASPPA membership is diverse and united by a common commitment to the private pension system.
CIKR is a national 401 (k) plan service providers. CIKR members are unique in that they are essentially in the provision of retirement services in relation to financial services companies which are mainly in the sale of investments. Members of CIKR offer plan sponsors and participants a wide variety of investment options from several financial services companies without an inherent conflict of interest. By focusing their activities on efficient operations and innovative retirement plan sponsor and participant services, CIKR members are an important segment and retirement-plan services market. Collectively, the members provide services CIKR approximately 68,000 to cover the 2.8 million participants and holding more than $ 120 billion of assets.