Senate Democrats in Connecticut are pushing for a state-sponsored 401(k) retirement plan for small businesses, designed for employers who cant afford to offer a retirement plan to their workers.
Senate President Donald Williams Jr., D-Brooklyn, said he estimates about 75% of Connecticuts small employers those businesses with 100 or fewer employees do not offer retirement benefits, leaving approximately 500,000 workers without a plan.
The bill has seen strong opposition from the states pension professionals, bankers, insurers and financial advisers, who argue that the program is too expensive, costing $1 million for the first two years and $400,000 in following years.
Also, employees of small businesses can set aside retirement funds in Individual Retirement Accounts.
Clare Hushbeck, a labor economist at the American Association of Retired Persons in Washington, D.C., said the 401(k) is preferable because funds can be automatically deducted from an employees paycheck.
The bill does not require small business employers to provide a company match, which is both a key advantage to 401(k) plans as well as the reason these plans are so costly.
The state of Washington passed legislation last year to set aside money for a two-year study of the concept, and similar legislation is being debated in California, Illinois, Indiana, Maryland, Michigan, Ohio and Pennsylvania, according to the AARP.