Connecticut comptroller Sean Scanlon and Rhode Island general treasurer James Diossa recently announced a regional partnership between the two states’ retirement savings programs for private businesses. Rhode Island’s recently created RISavers program will partner with Connecticut’s MyCTSavings program and its administrator, Vestwell State Savings, as it rolls out a pilot program anticipated next spring.

The joint press conference where Scanlon and Diossa appeared to announce the partnership marked one of the first occasions when details about how the RISavers program will operate were revealed.

The RISavers program was signed into law by Rhode Island Gov. Dan McKee in September. The authorizing legislation that created the program directed the treasurer’s office to create a retirement savings program in the form of a Roth IRA for “the purpose of promoting greater retirement savings from Rhode Island private sector employees in a convenient, voluntary, low-cost, and portable manner.” To be eligible, employees must be at least 18 years old and have been employed for at least 120 days at an employer with at least five employees and that satisfies the state’s requirements to participate in a payroll deposit retirement savings program.

The treasurer is also responsible, per the law, for encouraging participation in the program, and ensuring that accounts opened through the program follow employees.

The law directed the treasurer to select a third-party administrator for the program. Now, when the program rolls out next spring, the Rhode Island treasurer and Connecticut’s comptroller office will make decisions about investment options available through the program.

Started in 2022, MyCTSavings automatically enrolls employees of eligible employers in the program and invests 3 percent of participating employee’s total pay after a 30-day opt out period. For the first 60 days, funds are invested in a money market fund. After 60 days, employees who haven’t changed their investment strategy have funds “exchanged to a default Target Retirement Date Portfolio” based on the anticipated year they retire at the age of 65. RISavers also has automatic enrollment.

Participating employees are able to withdraw from the program at any time but may incur penalties and owe state and federal taxes.

According to a press release from Scanlon’s office, the program has over 6,600 enrolled employers, 29,000 savings accounts and $33 million in assets.

Rhode Island officials billed the announcement of the partnership as a step towards securing financial security for more working Rhode Islanders.

“Ensuring quick, easy access to retirement savings plans is critical to keep money in Rhode Islanders pockets. As we work to raise incomes, partnering with the state of Connecticut’s Comptroller and Vestwell Retirement Savings will put thousands of our residents on a path to a financially secure future.” said McKee via a press release.

A press release from Scanlon’s office will benefit both states and will “reduce fees paid by participating employees and allow for the opportunity to build future partnerships.” Currently, MyCTSavings assesses an annual asset-based fee of 0.26 percent, including the investment management fee of underlying funds, plus an annual $26 account fee.

“After a lifetime of hard work, everyone deserves access to a dignified retirement. Today’s historic partnership between Connecticut and Rhode Island will help make that a reality for the residents of both states. Since the launch of Connecticut’s program in 2022, we have helped tens of thousands of residents begin saving, and I look forward to Rhode Islanders having the same opportunity.” Scanlon said via press release.

Republish This Story

Republish our articles for free, online or in print, under a Creative Commons license.