Retirement Savings Mandate Gains Final Legislative Approval, Sent to Governor

The “New Jersey Secure Choice Savings Program Act” (A4134) gained final legislative approval Monday when the Assembly approved the Senate amended version. The Senate passed its amended version 29-6 last week. Yesterday’s Assembly vote was 54-20-1.

The measure has been sent to Gov. Phil Murphy who is expected to sign it into law.

Under the legislation, employees of 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. As amended, if an employee fails to set a contribution level or opt-out of the program, the default contribution level is three-percent of the employee’s wages. An “employee” is defined as any individual who is 18 years of age or older, who is living or employed in the state, and whose wages are subject to New Jersey income tax withholding.

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.