Connecticut issues RFP for workplace pensions advice as states address lack of provision

The US State of Connecticut has issued a request for proposals (RfP) for an investment consultant for its nascent auto-enrolment workplace retirement savings scheme, which it passed into legislation in 2016 to provide retirement security for the 600,000+ citizens without any provision.

The Connecticut Retirement Security Authority (CRSA) programme, which is predicted to reach $4bn in assets within 10 years, is the latest state-wide scheme to be introduced in the US, with Oregon, Illinois and California all launching their own programmes in the last few years.
It’s part of a wider push by states to improve access to pensions in what in California’s case has been called the “most ambitious push to expand retirement security” since Social Security in the 1930s.

Any company in the New England state with more than five employees, that is not offering retirement provision, will be expected to sign up when CRSA launches.

John Erlingheuser, Advocacy Director at the AARP, the US retirement body, stressed the importance of such state based savings initiatives by highlighting the $40trn retirement savings deficit estimated to exist in the US.

“Fewer and fewer companies are offering pensions or 401(k)s [the US DC account] and those that are least likely to have them are people in the moderate to low income jobs and who are going to be most reliant on government help at retirement”, he said.CRSA is now looking for a consultant to help “monitor, review, and evaluate the available universe of investment funds and managers” open to programme, which stipulates in the RfP that its total annual fees “must not exceed 75 basis points of the total value of the Program assets”.

ESG is not specifically mentioned in the RfP, which closes on October 1, but does state that the successful bidder will be expected to keep the “Board and the Executive Director informed about current investment trends and issues”.

When asked if ESG would be a consideration for the scheme, CRSA’s Executive Director, Mary Fay told RI that “everything is on the table right now”.

California’s scheme, CalSavers, which went live in July, is the only programme that currently offers an ESG investment option – managed by Newton Investment Management.

A spokesperson for Oregon’s plan, OregonSaves, recently told RI that as the programme matures it would look into other options “and a socially responsible one would of course be one to consider”.

CRSA’s Fay also said Conneticut is still in the “vetting process” for the RfP it put out in April , and which closed in June, for a provider of plan administration and management.

A 2018 request for information on “Program Administrator Services” put out by CRSA saw submissions from BNY Mellon, AllianceBerstein, Prudential and Ascensus.