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HARTFORD — MyCTSavings – the new state-sponsored retirement program – was billed as an easy way for businesses with five or more employees and no retirement plan to sign up and enroll their workers in a Roth IRA.
But nearly a year and a half after the program’s statewide launch, the original March 30 deadline to enroll has been extended into August, and so far only 58 percent of businesses required to sign up have enrolled.
For certain business sectors far fewer have enrolled. Just 37 percent of full-service restaurants and 36 percent of limited-service restaurants have enrolled, and only 37 percent of businesses serving the elderly and people with disabilities have enrolled, according to figures provided by the Office of State Comptroller.
The legislature signed off on the program several years ago, and launched statewide in April 2022. A rolling notification to employers began in early April 2022 with the last wave in Jan. 2023. The most recent wave – of newly eligible employers – was in July.
In an interview on Thursday with CT Examiner, State Comptroller Sean Scanlon said the rollout was accelerated in January after he took office and has been a success.
Scanlon noted that 4,936 businesses had signed up by Aug. 17. He said he expects that number to exceed 5,000 by the new Aug. 31 deadline. And Scanlon said that, compared to many of the six other states that have launched similar programs, Connecticut has outpaced most.
But whether enrollment has been hindered largely by a lack of compliance from employers, as the Office of the Comptroller maintains, or by problems with the system and registration process is a matter of debate.
Case in point: Newtown’s Foundry Kitchen and Tavern.
The restaurant’s finance manager, Patty McCartney, said she was eager to sign up for the restaurant’s more than 70 workers, 75 percent of whom are part-time. But she told CT Examiner that her restaurant, which caters in American and Asian/Hawaiian cuisine, uses the country’s largest payroll system, ADP. And McCartney found out that the state program doesn’t work with ADP, leaving her to manually input her employee information weekly, which would take hours of her time.
The state program also doesn’t work with other payroll systems, including Prime Pay, but does integrate with more than a dozen payroll providers, including Paycom, Abacus and COPAC.
McCartney said that when she called MyCTSavings to try to talk to someone about the program and help her navigate through the enrollment process, she was told by several people, on separate occasions, to go online and or watch a video. Both options, she said, were confusing.
“They kept on referring me to the website,” McCartney said. “I’d been calling for a few months and I finally got someone who was able to walk me through the setup.” That was Aug. 16.
No one from Prime Pay or ADP was available for comment in time for the publication of this story.
Jude Read, business manager for CT Examiner, told this reporter that she found the process to sign-up frustrating and annoying. CT Examiner has 7 full-time employees.
Read said she was told by the state that the company needed to register after the new year. But she said when she contacted the state in the second week of January, she was told the program wasn’t functioning yet. Noting the March 30 deadline, Read said she called back in mid-February, was told the program wasn’t fully operational. She then gave her company’s information to a service representative who said her attempts to enroll would be noted on the account and that she’d hear back. Read described her frustration after later calls when she was told the state didn’t have her company’s information on file and had no record of her having called.
“I’m retired and I had the time to do this, but not everybody has that time. If a business operated this way, you wouldn’t have a business,” Read said.
Scanlon, for his part, said he’s been traveling the state, especially in the past several weeks, working to get more businesses compliant. Scanlon said most of the feedback he’s received from businesses has been positive, but acknowledged that some people might face unintended roadblocks.
“I’ve been walking around [the state] and talking to businesses and I’ve got a lot of feedback about how easy it is to sign up,” Scanlon said during a 30-minute phone interview. “That does not mean it is easy for everybody, and we recognize that. We have a three-person team doing this for every single business in the state with more than five people so, sometimes, it might take a little while to get back to people. “
Scanlon said that it was ADP’s choice not to integrate their system with the state and there is nothing, at this point, the state can do about it. Scanlon did say he was optimistic the company would join the state network at some point down the road.
“You have to understand that these payroll companies are offering their own retirement plans to their members,” Scanlon said. “And, so you know, they are a little bit reluctant to work with us in some cases because they view us as competition. I don’t view it that way.”
Scanlon said he would reach out to Prime Pay.
He also said that – as of today – there are no real penalties for those businesses who don’t sign up.
“I just want to be clear that there are penalties at our disposal,” Scanlon said. “I can take a business to court for non-compliance but, I said in the first month of my tenure [January 2023], that I was not going to do that. I was raised by a small business owner and I’m not going to be taking their mom and pop business to court because they are not complying with the program.”
According to the Office of the State Comptroller – prior to the plan being launched – there were 600,000 private-sector employees without a employer-sponsored retirement savings plan.
Scanlon said that “An Act Concerning the Connecticut Retirement Security Program” would have fined businesses that didn’t comply, but the bill never made it through the legislature last session.
If approved, the measure would fine businesses employing between 5 and 24 workers, $500; businesses employing between 25 and 99 workers, $1,000; and businesses with 100 or more workers, $1,500.
Scanlon said he’s proud that just 876 businesses were signed up when he took office in January and nearly 5,000 are enrolled today.
He said the deadline was pushed back from late March to Aug. 31 because he was eager to have more businesses sign up.
Moving forward, Scanlon said that sometime in September his office will craft a survey to see how to hear the concerns of business owners and increase enrollment.
Asked about the low enrollment of restaurants, Scanlon said: “Restaurants, in particular, were hit very hard by the pandemic. It’s been hard for them.” He also noted the industry has a lot of part-time staff and turnovers that, he said, could be a contributing factor on why the industry enrollment rate is less than 40 percent.
And asked about whether the non-compliance of many restaurants was due to undocumented workers or part-time transient workers, Scanlon said: “I don’t think so. I think the undocumented population is a pretty small percentage of the jobs that would be applicable here. I wouldn’t say that is an issue.”