Hartford Business Journal

8 Hartford Business Journal • June 27, 2016 www.HartfordBusiness.com FOCUS EMPLOYEE BENEFITS Foley, for example, launched its program in May. "It makes us stand out," said Richard Pummell, vice president of operations at Foley, which is based in the Colt Armory and has about 135 employees in Hartford out of about 180 nationally and is actively hiring. "And then when we're on campus recruiting, it's very appeal- ing to be able to say, 'Hey, we'll pay off all of that debt that you're just about to start repaying.' " Student loan debt is one of the biggest stressors for college graduates, so offering an avenue to repay those loans is a significant recruitment tool and a way to retain employees, said Jillian Doll, Foley's head of talent acquisition. It's important to Foley for employees to be less stressed at work, said Doll, whose company has foosball and ping- pong tables in its break room. If they're less stressed, they'll perform better and be happier, the company and its custom- ers will be happier, and the company will benefit, she said. The program has an annual cost of $1,000 per employ- ee, "but when it comes to retaining our employees and recruiting top talent, it's worth the money," she said. Pummell doesn't see any risks to the program. "We truly see this as an employee benefit that only has upside," he said. "We hope to be in a situation where we make a significant annual payout, as it will be an indicator of retaining a qualified and loyal workforce." Millennial recruitment tool Bruce Elliott, compensation and benefits manager for Alexandria, Va.-based SHRM, said all signs point to the student loan repayment benefit gaining traction among employers. Millennials are graduating with an average of about $35,000 in student loan debt, Elliott said, citing a U.S. Trea- sury Department figure. They have about four loans out- standing and are getting starting salaries of about $45,000 in humanities fields and $65,000 in STEM fields, he said. Graduates' debt-to-income ratio indicates that stu- dent loan repayment benefits are important to Millenni- als, Elliott said, referencing survey data from EdAssist. "They're finding that about half of the respondents to their survey are really expecting this type of help from their employers," he said. "So taken altogether, I can abso- lutely see where this is the beginning of a trend and that we're going to see an expansion of this type of benefit." Millennials aren't the only ones that benefit from such a program. About 30 percent of Generations X and Y still have student loans outstanding, Elliott said. Other companies with a Connecticut presence are also offering the perk. PwC LLP, for example, last September began offering a $1,200-per-year benefit for up to six years, Q&A Employers must prep for new public-retirement plan Q&A talks with Comptroller Kevin Lembo about the Connecticut Retirement Security program for private-sector workers. Q: The legislature has passed and Gov. Dan- nel P. Malloy has signed a new law creating the Connecticut Retirement Secu- rity program, which will estab- lish Roth individual retirement accounts (IRAs) for eligible private-sector employees. How will employers be impacted by this new program? A: Employers who have five or more employees and who do not offer any retire- ment-savings option to their employees will be required to offer either the state program — or select a retirement- savings option of their choice from the pri- vate market to offer to all of their workers. Those companies that select the state program over a pri- vate-market option will enroll all of their employees into the state program utilizing payroll deduction after a 120-day notice period. During the course of that 120-day period, employees will be given informational mate- rial and time to consider whether they wish to participate or not. Employees can choose to opt out during the notice period (and any- time thereafter) and — if they do opt out — the employer will not enroll them. The program, not the employer, will be responsible for creating the notice and enrollment materials and will distribute them to participating employers. The employer's role in facili- tating the program will be very minimal. Q: What are the eligibility requirements for an employee to participate in the program? A: Employers will have 120 days from the program's effective date or from any new employees' hire date to enroll their employees into the program. Therefore, those employees that work for less than 120 days will likely not be eli- gible to participate. There are no other eligibility requirements for employees to participate. Q: Are there penalties for employers who fail to remit con- tributions, or who fail to enroll employees in the program? A: If employers fail to remit contributions of an employee who is enrolled in the program after deducting the contribu- tions from the employee's pay- check, then the existing wage- theft laws will apply along with their respective penalties as are already enforced by the Depart- ment of Labor in such cases. If employers fail to enroll their employees in the program or to remit contributions of an employee enrolled in the program that have not been deducted from the employee's paycheck, then employees have a private right of action to sue the employer for denying their right to participate in the pro- gram. The allowable penalty under this scenario is prospec- tive enrollment, remit- tance of contributions and attorney's fees. The Connecticut Retirement Security Board also included in its recommen- dations that the implementing board should be able to waive any penal- ties if the employer made an honest mis- take. The board also decided to not include any penalty fees for employers who fail to enroll their employees, as is included in other states' programs. Q: What impact do you think this new program will have on employer-sponsored retirement benefits? Is there a chance employers will drop their retirement benefits and encourage employees to join the state program instead? A: The Connecticut Retire- ment Security Board researched this very question by conducting an employer survey with both employers who do not already offer an employer-sponsored retirement plan and those who do. In the sur- vey, they asked employers who currently do offer a plan whether or not they would drop their plan in order to participate in the state program. Only 1 percent of employ- ers surveyed said they would drop their plan for the state program. Q: How much money is being invested to start this program? How much will it cost the state annually to maintain it? A: This program will be a self- sustaining program that does not use any state funds. The program's administrative costs will be paid for by a very small fee on par- ticipants' account balances as is traditionally done with IRAs and most retirement-savings vehicles. The large scale of the program will allow participants with small account balances to be charged much lower fees than they would KEVIN LEMBO Comptroller, State of Connecticut Continued Millennials fret student loan debt from page 1 Continued Richard Pummell, Foley's vice president of operations, said the company is currently hiring to add to its 180-person U.S. work- force. He hopes Foley's student loan repayment program will help them attract higher-quality recruits. H B J P H O T O | J O H N S T E A R N S

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