Companies that fail to enroll their employees in Connecticut’s state-administered retirement program will face financial penalties for the first time, under a bill that passed this spring and took effect July 1.
Launched in 2022, the Connecticut Retirement Security Program provides retirement savings accounts for private-sector workers whose employers do not offer them. All businesses with five or more employees are required to enroll their employees in the program, unless they offer a retirement plan of their own.
Under previous law, the only consequence for companies that did not comply with these requirements was the possibility of lawsuits from the labor commissioner or state comptroller.
Now, businesses who have not enrolled employees will receive three notices, then face civil penalties for each year they are out of compliance for a period of at least 90 days. Maximum penalties depend on the size of the business, topping out at $1,500 for companies with more than 100 employees.
The recent bill also tweaked the state retirement program in other ways, including by extending it to cover certain personal care attendants and by tying default contribution levels to federal standards.
The legislation drew support from organized labor, the AARP and several top officials.
“By passing this bill, we will make important changes to an essential and growing tool that not only secures the financial futures of our enrollees, but also our future as a state,” Comptroller Sean Scanlon said in public hearing testimony earlier this year.
“The ability for workers to save for retirement is essential, especially as fewer employers offer defined benefit pension plans,” AFL-CIO president Ed Hawthorne testified, urging lawmakers to support the measure.
Many who submitted testimony on the bill praised the new inclusion of personal care attendants in the retirement program. Andrea Barton Reeves, the state’s commissioner of social services, argued the provision “provides this workforce with a portable, voluntary retirement planning option that will remain available to them should their employment circumstances change.”
Opponents criticized the bill as anti-business, with one resident suggesting it would “desolate” companies in the state.
Ultimately, the measure passed the State Senate along party lines in early May, with all Democrats voting in favor and all Republicans voting against. Four weeks later, it passed the House with 102 votes for and 38 against. The governor then signed the bill into law on June 9.