Legislation To Create Worker Retirement Plans Goes To Murphy

Co-sponsored by Sens. Joseph Lagana, D-38th of Paramus, and Troy Singleton, D-7th of Delran, the legislation would establish individual retirement accounts for private sector employees who aren’t already offered retirement plans through their employers, as well as a state board to implement and oversee the program.

TRENTON — Legislation creating state-administered retirement accounts for workers who aren’t offered pensions, 401(k)s or other retirement savings plans through their jobs is headed to Gov. Phil Murphy’s desk.

The Senate voted 29-6 on Thursday to give final legislative approval to the bill, known as the New Jersey Secure Choice Savings Program Act.

Co-sponsored by Sens. Joseph Lagana, D-38th of Paramus, and Troy Singleton, D-7th of Delran, the legislation would establish individual retirement accounts for private sector employees who aren’t already offered retirement plans through their employers, as well as a state board to implement and oversee the program.

Under the legislation, employers would be required to automatically enroll their employees into the program at a 3 percent paycheck deduction, but employees would have the option to opt out or choose a different contribution amount.

Also, companies with fewer than 25 employees would be eligible to participate in the program but would not be required to join.

If signed into law by Murphy, the legislation would become effective immediately but give the new board two years to establish the program and begin enrolling employees, as well as the ability to extend that deadline if required.

Participating employees would be charged an undetermined administrative fee, but the Office of Legislative Services was unable to project the administrative costs or if the revenues from the fee would cover all expenses.

The legislation was championed by the AARP and other advocates as a critical anti-poverty measure that would ultimately save the state money and assist small businesses with employee recruitment and retention.

They claim that one out of two state workers don’t have access to an employer-sponsored retirement program, such as a pension or 401(k), and that the vast majority of those workers have not adequately saved for future retirement.

A recent AARP commissioned poll of 500 New Jersey residents between ages 18 and 64 revealed that more than 80 percent of them did not feel financially prepared for retirement, and 72 percent felt anxious.

Nationally, AARP has cited a 2013 study that found four out of 10 people between 55 and 64 had nothing saved for retirement.

Sen. Steve Oroho, R-24th of Franklin, spoke in opposition to the bill Thursday, saying he supports the intent but is worried about the state taking on more financial responsibilities.

“The idea behind the bill is good, but for New Jersey to take on the fiduciary responsibility is a mistake,” he said.

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