Bill Summary for Bill Number SB10-035

Date: 02/02/2010

Final
BILL SUMMARY for SB10-035

HOUSE COMMITTEE ON BUSINESS AFFAIRS AND LABOR

Votes: View-->	Action Taken:
Moved to refer Senate Bill 10-035 to the Committee	PASS

09:40 AM -- Senate Bill 10-035

Representative Bradford, prime sponsor, presented Senate Bill 10-035 concerning automatic enrollment in employee retirement plans. This bill allows employers whose retirement plans are not subject to the Employee Retirement Income Security Act of 1974 (ERISA), to initiate automatic enrollment plans for their employees. These employers include 501(c)(3) organizations, public schools, and churches. Employees can choose not to participate in a plan, but must take action to opt out. Employers are not liable for investment decisions made on behalf of their employees if the following conditions are met:

Employees have at least quarterly opportunities to select investments;
Employees are given notice of investment alternatives available, how to change investments, and decisions that will be made in absence of employee direction; and
Employees are given at least annual notice of the actual default investments made with employee contributions.

09:43 AM -- Sister Melissa Carnardo, representing Saint Mary's Regional Medical Center, testified in support of the bill. She gave some background on Saint Mary's and explained the 403 (b) plan that is available to their employees. Sister Carnardo talked about the use of automatic enrollment in private companies and other hospitals. She discussed the current efforts used to encourage employees to enroll in the retirement program. Representative Soper commented on the bill and said he was concerned about having employees opt out of the plan instead of opting in. Representative Gagliardi shared Representative Soper's concerns and asked if they are moving toward mandatory enrollment. Sister Carnardo explained that the plan is voluntary and that they are not moving towards mandatory enrollment. Representative Liston asked whether the organization offers plans other than the 403 (b) and commented on the benefits of automatic enrollment. Representative Stephens talked about her experience with a non-profit and not being enrolled in a retirement plan automatically. Sister Carnardo explained that similar organizations saw an enrollment increase from 33 percent to 88 percent following automatic enrollment. Representative Middleton asked the sponsor if this is a common practice in other areas.

09:56 AM -- Denise Kay, representing the Colorado Society for Human Resource Management State Council, testified in support of the bill. She described her organization and its support of the bill. She said studies show that employees are more likely to participate in retirement plans that are opt out as opposed to plans that are opt in. She addressed earlier concerns about mandatory enrollment and said they are not able to do so under current law. Ms. Kay said the bill is an avenue for increased participation in retirement plans and she talked about fiduciary liability of human resources professionals. She discussed a provision in the bill that states if an employee opts out of the plan, the employer must give the employee's money they invested plus interest back, and remove the employee from the plan. Representative Liston asked whether the organization offers plans other than the 403 (b). Ms. Kay said she cannot speak for Saint Mary's, but in general, the private sector offers a 401 (k) plan, and the public sector a 403 (b).

10:03 AM -- Rich Jones, representing the Bell Policy Center, testified in support of the bill. Mr. Jones provided a handout outlining the Bell's position on the bill (Attachment A). Mr. Jones spoke to studies that show that retirement plan participation rates increase when there is automatic enrollment. He said new employees are more likely to enroll in the plan and are more likely to stay in. Mr. Jones responded to committee questions.

10:06 AM

Representative Bradford added that in addition to the earlier organizations, the Colorado Hospital Association, the Organization of Patient Educators, and the Sister's Charity also support the bill. Representative Soper commented that he will not support the bill and said the religious organizations should be covered by ERISA. Representative Liston reminded Representative Soper that 403 (b) plans are not covered under ERISA and commented on the bill.


BILL:	SB10-035
TIME:	10:07:06 AM
MOVED:	Bradford
MOTION:	Moved to refer Senate Bill 10-035 to the Committee of the Whole. The motion passed 10-1.
SECONDED:	Liston
		VOTE
	Balmer	Yes
	Bradford	Yes
	Casso	Yes
	Kerr A.	Yes
	Liston	Yes
	Middleton	Yes
	Priola	Yes
	Soper	No
	Stephens	Yes
	Gagliardi	Yes
	Rice	Yes

Final YES: 10 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: PASS