State Retirement Savings Mandate Passes Senate Committee

The “New Jersey Secure Choice Savings Program Act” (S2891) was reported favorably from the Senate Budget and Appropriations Committee and awaits a floor vote in the upper chamber.

The Assembly companion (A4134) passed the lower chamber (52-24) in December.

Under the legislation, employees of medium to large companies that do not currently offer a qualified retirement savings program would be automatically enrolled in payroll deduction for a state-sponsored Individual Retirement Account (IRA). Employees would be able to opt-out of the program or adjust their deduction. If an employee fails to set a contribution level or opt-out of the program, the default contribution level is six-percent of the employee’s wages.

The legislation applies to private sector employers. Its provisions are mandatory for companies with 25 or more employees that have not had a qualified retirement plan in place for two years, and optional for companies with fewer than 25 employees or those that have been in business for less than two years.

The NJCUL has actively opposed the measure for a variety of reasons including the regulatory burden it poses for small businesses as well as governmental competition for individual savings dollars which are more appropriately provided for by the private sector.