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Hearing Scheduled on NJ Secure Choice Savings Program

The Labor Committee of the New Jersey Senate will hold a hearing Dec. 3 on legislation that would create the New Jersey Secure Choice Savings Program, a state-run retirement plan for private-sector employees whose employers do not offer a retirement plan. Under the proposed plan, those employees would be automatically enrolled in an IRA with a standard payroll deduction of 6% of wages. The program would not apply to public-sector employers in New Jersey.

Both chambers of the New Jersey legislature are considering measures that would create the program. S2891, the Senate version of the legislation that would create the program, was introduced by Sens. Joseph Lagana (D-Bergen and Passaic) and Troy Singleton (D-Burlington). The General Assembly version, A4134, was introduced by Assemblyman Roy Freiman (D-Hunterdon, Mercer, Middlesex and Somerset), Assemblyman Raj Mukherji (D-Hudson) and Assemblywoman Carol Murphy (D-Burlington).

The legislation defines “employer” as a person or entity engaged in a business, industry, profession, trade, or other enterprise in New Jersey, whether for profit or not for profit, that:

  • has at least 25 employees;
  • has been in business at least two years; and
  • has not offered a qualified retirement plan in the preceding two years. 

Employers to whom the measure would apply would be required to establish a payroll deposit retirement savings arrangement to allow its employees to participate in the program no later than nine months after program implementation and the opening of enrollment. They also would have to enroll new employees within three months after the date of hire, unless the employee opts out of enrollment.

Participation in the program is optional for small employers, which the bills define as a person or entity engaged in a business, industry, profession, trade, or other enterprise in New Jersey, whether for profit or not for profit, that employed less than 25 employees throughout the previous calendar year, or has been in business less than two years, or both. Small employers that want to participate in the program must notify the New Jersey Department of the Treasury that they are interested.

The funds in the program would not be property of the state of New Jersey. The legislation would create program would create a New Jersey Secure Choice Savings Board to implement and oversee the program, as well as a New Jersey Secure Choice Administrative Fund, which would be a nonappropriated separate and apart trust fund in the General Fund to be used to pay administrative expenses incurred by the board in the performance of its duties. 

The legislation would allow employees to select a contribution level and change it once per quarter. Similarly, they would be able to select an investment option from the investment options provided by the New Jersey Secure Choice Savings Board, and would be able to change their investment option once every calendar quarter. 

Assembly Status

The Assembly Financial Institutions and Insurance Committee in 8-3 vote with two abstentions reported A4134 favorably on Oct. 15. It is now before the Assembly Appropriations Committee.

The legislation provides that the program be implemented, and that enrollment of employees begin, within 24 months after the effective date of the bill.