Hartford Business Journal

8 Hartford Business Journal • January 7, 2019 • www.HartfordBusiness.com Reporter's Notebook Matt Pilon | mpilon@HartfordBusiness.com Health Care/Bioscience, Startups & Entrepreneurs, Government/Law and Energy EMPLOYEE BENEFITS As CT retirement plan slowly approaches, Oregon offers initial insights A s Connecticut's state- created retirement plan for private-sector workers aims to start enrollment this year, a similar system in Oregon is showing mixed results as it rolls out, potentially hinting at what's ahead for the Nutmeg State. OregonSaves, launched in 2017 as the U.S.' first state-sponsored, private- sector retirement plan, reached nearly 22,000 accounts as of November with about $10 million in assets, according to the Center for Retirement Research (CRR) at Boston College, which has analyzed the design of retirement systems in Oregon, Connecticut and elsewhere. CRR had initially projected that Or- egonSaves would reach a higher asset total in its first year ($100 million), but the group recently told the Wall Street Journal it had overestimated how quickly bigger employers would sign up, and that there have been delays between registration and employees making initial deposits. For those who support state-man- dated retirement plans, which aim to reverse workers' woefully inadequate retirement-savings habits, the bright side in the initial Oregon data is in employee behavior. One of the most important statistics being watched by states with either newly launched programs (like Califor- nia and Illinois) or those still working to set theirs up (like Connecticut and New York) is how many automatically enrolled workers choose to opt out. In Oregon, opt-out rates are meet- ing initial expectations, with 29 percent of eligible workers formally choosing not to participate, CRR said. The most common reason given by those who opt-out is they can't afford to save, followed by those who say they have another retirement plan. A second key metric is the level at which participants choose to contrib- ute, known as the deferral rate. As of November, 93 percent of participants in OregonSaves had not changed the default savings rate of 5 percent of income, CRR said. (Connecticut is planning a default rate of 3 percent.) CRR noted that OregonSaves will begin increasing its default defer- ral rate in 2019, and for the next five years, until it reaches 10 percent. The Connecticut Retirement Secu- rity Authority (CRSA), which still hasn't named an executive director, has been working to set up its own auto-enroll- ment plan since the legislature ordered it to do so in 2016. The goal is to pro- vide a savings vehicle for the estimated 600,000 state residents whose employ- ers do not offer one. Key advocates for the program have included Comptroller Kevin Lembo and AARP. There have been delays. The program, which faced opposition from the Con- necticut Business & Industry Asso- ciation (CBIA), was originally slated for implementa- tion at the start of 2018, but the CRSA postponed the rollout, citing complexities. Meantime, a recent legal challenge to California's retirement program, which argues CalSaves violates federal law, presents a potential legal hurdle for Connecticut and other states. The CBIA has called the retirement program a potentially costly burden on businesses, since employers would have to dedicate resources to inform employees about the plan (though company contributions are not re- quired or allowed). CBIA has also said employees can sign up for private IRA accounts. Despite the slow start, CRSA Chair- man Scott Jackson said he expects progress in the coming months. "I think you'll see a lot of movement in the first quarter of 2019," said Jack- son, who is also commissioner of the state Department of Labor. "We will do a phased roll out with some companies that are excited to participate." FINANCE & INVESTMENTS Nappier: CT college savings program has helped 56,000 students A s she prepares to leave office after nearly two decades as state treasurer, Denise Nap- pier says the state's 529 college sav- ings program is in "strong shape." The Connecticut Higher Education Trust (CHET), created in 1997 and ad- ministered by Nappier since she took office in 1999, reached $3.6 billion in assets and 152,000 account owners this year. Nappier, who announced a year ago she would not seek reelec- tion, will soon be succeeded by Shawn Wooden. CHET offers state and fed- eral tax advantages to spur families to sock away savings for tuition, certain room and board costs, com- puters, books, fees and certain other education expenditures. Nappier said she has negotiated five reductions in plan management fees with CHET's plan managers, including TIAA-CREF, and that today, administrative and management fees are ranked in the bottom 25 percent among 529 providers in the industry. In 1990, fees totaled nearly 1.6 per- cent of assets for CHET participants, while today, fees for CHET's most common investment options range from 0.35 percent to 0.48 percent of assets, according to Nappier's office. It's a far cry from 1999, when Nap- pier, after ousting former Treasurer Paul Silvester in an election, found the plan in "serious financial distress." It had 4,000 account owners at the time, and less than $19 million in assets. Nappier replaced the original plan manager, and not long after, Silves- ter and several others went to prison for arranging political kickbacks through the then fledgling program. "My goal from day one was to of- fer Connecticut families a premier investment program for higher education," Nappier said. ENVIRONMENT CT recycling program capturing more unused paint A paint recycling program funded by mandatory fees collected on paint sales continued to see growth in its recently completed fifth year. The Connecticut Architectural Paint Stewardship Program in fiscal year 2018 collected 342,350 gallons of paint that was sold but not used. That's up from 322,568 gallons in 2017 and 240,798 gallons in its first year (2013), according to nonprofit overseer PaintCare. In all, the program has collected and processed more than 1.5 million gallons of paint since 2013. Denise Nappier, State Treasurer CRSA Chairman Scott Jackson said he expects enrollment in the state-created retirement plan to begin in the coming months. PHOTO | HBJ FILE 2014 2015 2016 2017 2018 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 Gallons collected 240,798 320,414 342,350 275,940 322,568

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