The question of state-run retirement plans for employees has been a hot topic in recent years, and it has become an increasing trend for states to introduce legislation that would make this a reality for businesses of a certain size. California has already passed the first of such plans, and others could follow.
Most recently, the Connecticut Joint Labor and Public Employees Committee introduced S.B. 249, An Act Promoting Retirement Savings, to create a state-run retirement program for the private sector. Employers with more than five employees would be forced to automatically enroll their employees in the state-run plan if they do not provide access to a retirement plan.
This legislation has the capacity to disrupt the current competitive nature of the private market for retirement plans and compete with financial advisors that have been ethically helping their clients achieve their financial goals for many years.
According to the proposed bill, the services for government-managed plans would be outsourced to contractors, but independent financial advisors would not be eligible to provide their services for those plans. (The definition section of the legislation actually spells out its definition of a “vendor” and does not include “individual registered representatives, brokers, financial planners or agents.”)
What do you think of all this? We’d love to hear your thoughts in the comments section!