The Connecticut Retirement Security Authority (CRSA), which has faced multiple delays and funding issues while trying to implement a statewide retirement savings program for private sector workers, was hit with another set-back this year: the budget.
Language included in the budget implementer signed by Gov. Ned Lamont essentially stripped the Retirement Authority’s governing board of its power, transferring decisions and fiduciary responsibility to the comptroller and relegating the board largely to “advisory” status, with a couple minor exceptions.
According to the budget summary, the new language “replaces the existing Connecticut Retirement Security Authority Board with the Connecticut Retirement Security Advisory Board and makes the Comptroller responsible for administering the Connecticut Retirement Security program.”
State Comptroller Natalie Braswell said she was not consulted on this change and found out about it “at the same time everyone else found out about it being in the budget,” during a meeting by the CRSA Board on May 20.
Braswell said her discussions with legislators, the Office of Policy and Management and the governor’s office were limited to obtaining resources to administer the program.
“We envisioned the legislature providing us with resources for staffing and other, sort of, you know monies to be able to pay the consultants and things like that,” Braswell said. “There was never a bill, there was never a thought that something was going to happen with it, these were just conversations we had in terms of the future of the authority.”
Board member Edward Zelinsky said the change shifts fiduciary responsibility for the program to whomever occupies the position of comptroller, making the program possibly the “weakest in the country.”
“The strongest fiduciary obligations, which this board has, is when you have a multi-member, diverse board that act as fiduciaries and that’s the norm,” Zelinsky said. “We are now, I believe, if not the only, one of the few state boards that has a single fiduciary. That’s not healthy for pension plans, it’s not healthy for this program and frankly I think that we need to have this decision reversed. The fact that this was done without the comptroller’s consent or complicity, I think confirms that it should be reversed.”
“If you put that together with the advisory nature of the board, it means to me, legally, that the comptroller can make his or her own decisions and does not have to follow the board,” said Karen Jeffers, an attorney with the law firm Pulman and Comley. “I think it makes the role of the board very unclear in terms of what the board’s fiduciary responsibilities are because its consulting. So, it’s a dilemma.”
But remedies appeared few and far between as the budget is already signed and now law.
“I don’t necessarily know what our recourse is, given that it was implementer language in the budget,” Braswell said. “The fiduciary issue, I think, is an issue, because, I think, the comptroller to be the sole fiduciary, as Mr. Zelinsky pointed out, is problematic for this program.”
“In general, I think there’s a terrible procedural problem whenever things are done this way through ominibus budget legislation which we all know is a way of cramming through details without there being a public hearing, without informing people,” Zelinsky said. “So, I frankly think we should go on record in strong opposition to what happened here.”
The Connecticut Retirement Security program was created under Gov. Dannel Malloy’s administration with the goal of providing an optional retirement savings program for private-sector workers who might not have access to retirement accounts through their employer, but the program has been beset with delays and problems since the beginning.
Although the program was initially set to launch in 2018, it was delayed due to legal issues, funding problems and the dismissal of its executive director Mary Fay, who is now the Republican nominee for the position of comptroller.
The program was finally given the green light to move forward and launched the MyCTSavings website this year. Employers are being contacted in waves based on the size of the company, according to meeting minutes from March 18, 2022.
But who will ultimately be controlling those retirement savings may well hinge on who is elected comptroller, not only this year, but into the future, as well.
Braswell is currently the interim State Comptroller, being appointed by Lamont after Kevin Lembo resigned, but she is not running for election to that office. Rep. Sean Scanlon, D-Guilford, and Fay have both received the nominations of the respective parties to run for Connecticut comptroller in the 2022 election.
“The board itself will be at the whim of whoever comes in at whatever time, it’s a political office. So, there’s a chance that someone comes in who is totally not in favor of this type of program and there’s no checks and balance on that person in terms of the program and in terms of sustaining it and keeping it going,” Braswell said.