N.J. Legislature Considers Mandatory Retirement Plan Measure

It’s not just public-sector retirement plan coverage that is generating attention in the Garden State — so is coverage in the private sector. The state Assembly and Senate, still in the midst of the debate over the state’s insolvent retirement plan, now are considering the New Jersey Secure Choice Savings Program Act, which would require certain private-sector employers with at least 25 employees to offer a retirement plan to them.

Speaker of the New Jersey General Assembly Vincent Prieto (D-Secaucus) introduced the Assembly version, A. 4275, on March 9; Senate President Stephen Sweeney (D-West Deptford) introduced the Senate version, S. 2831, one week later, on March 16.

The legislation would be mandatory for private-sector employers with at least 25 employees and do not offer their employees a qualified retirement plan; it would be voluntary for employees that have less than 25.

The legislation would create a retirement savings program for private-sector workers. It would be an automatic enrollment payroll deduction IRA. Employees would be able to opt out, set their own contribution levels and determine how their funds are invested and change those investments. The program would consist of funds received from enrollees in the program and participating employers.

The measure also would create the New Jersey Secure Choice Savings Board to implement the program and oversee the fund. The board would:

• design, implement and administer the program;
• appoint a trustee to the fund;
• govern risk management;
• determine investment options;
• entering into contracts;
• employ a staff to support the implementation of the program; and
• establish a process for enrollment in the program.

The legislation also requires that before enrollment begins, the board is to design and disseminate to all employers an employer information packet and an employee information packet, which must include background information on the program and appropriate disclosures for employees.

The measure calls for the program to be implemented, and enrollment of employees begin, within 24 months after it goes into effect. It also says that no later than nine months after implementation and the opening of enrollment, each employer covered by the bill must establish a payroll deposit retirement savings arrangement to allow its employees to participate in the program.

A. 4275 is before the Assembly Labor Committee; S. 2831 is before the Senate Labor Committee.