The legislation, which is co-sponsored by Sens. Joseph Lagana, D-38th of Paramus, and Troy Singleton, D-7th of Palmyra, is being pushed 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.

TRENTON — New Jersey lawmakers are again considering legislation that would automatically enroll private workers into state-administered retirement accounts if they aren’t already offered them through their jobs.

Known as the New Jersey Secure Choice Savings Program Act, the legislation was advanced from the Senate Labor Committee by a 4-0 vote, with one abstention Monday.

The legislation, which is co-sponsored by Sens. Joseph Lagana, D-38th of Paramus, and Troy Singleton, D-7th of Palmyra, is being pushed 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 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 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 cites a 2013 study that found four out of 10 people between 55 and 64 years-old had nothing saved for retirement.

“We’re not talking about not giving Christmas gifts. That means they’re not going to be able to keep the lights on or afford their prescription drugs,” said Sarah Gill, a senior legislative representative with AARP.

While employees at jobs without savings programs are free to enroll in a individual retirement account themselves, most don’t, Gill said.

AARP believes the creation of state-sponsored retirement accounts provides a solution. Under the proposed legislation, employees at companies with more than 25 workers that have not been offered a qualified retirement plan would automatically be enrolled in the state program, which would deduct a percentage of their paychecks to invest in IRAs.

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

Employees would be automatically enrolled at a 3 percent paycheck deduction, but would be able to opt out or choose a different contribution amount.

Similar programs have been established or under consideration in several states, including Oregon, New York, Illinois, Connecticut and California, Gill said.

New Jersey lawmakers began looking at the idea years ago but have never managed to get it approved and signed into law. The measure made it as far as the governor’s desk in 2016, but then-Gov. Chris Christie conditionally vetoed it, preferring for the state to create a web-based marketplace where private employers could shop for retirement plans to offer their employees.

The proposal remains controversial. During Monday’s hearing, representatives of the Securities Industry and Financial Markets Association, also known as SIFMA, testified in opposition to the legislation, arguing the measure, while well-intended, could make the state or individual employers at risk of liability under federal rules.

They also argued that the state plans do not permit employers to offer any kind of matching payment, often a huge incentive for participation and savings, and that employers that do offer retirement plans or are considering offering them may opt not to because of the state’s involvement.

“I believe this program will be a disincentive for employers who don’t offer plans now,” said David Pascrell, of the American Council of Life Insurers.

How much the program will cost the state to administer is also still undetermined, although Pascrell estimated it would likely run in the “tens of millions” range, at least to start.

Sen. Anthony Bucco, R-25th of Boonton, and Sen. Dawn Marie Addiego, R-8th of Evesham, also expressed concerns about the automatic enrollment. Bucco said he’d be much more likely to support the measure if employees were required to “opt in” for the payroll deduction and savings plan rather than “opting out.” He said that would be less burdensome on employers.

Assemblyman Roy Freiman, D-16th of Hillsborough, who is the Assembly sponsor of the legislation, said the proposed program was created based on so-called “best practices” promoted by securities and investment representatives, including the automatic enrollment. He said employers would only be responsible for providing information about the program to their workers and assisting with the payroll deduction.

“I’m sorry but I don’t see that as a heavy lift,” Freiman said.

Addiego wanted to know if employees who may not have realized they were automatically enrolled would be able to still opt out or make adjustments.

“Is there a period of time to get out or are they stuck,” Addiego asked.

Freiman said the intent is that employees receive information that makes it explicit that they must opt out or be automatically enrolled, but he said there have been conversations about having the first $1,000 be refundable so employees could change their minds.

“That’s something we’re talking about,” he said.

Addiego said she liked the concept and would vote it out of the committee. But she hoped to receive more assurances about employer liability before she would vote for it on the Senate floor. The legislation is expected to be referred to the Senate Budget and Appropriations Committee before then.

“I want to vote for this,” Addiego said.

Major business advocates such as the New Jersey Business and Industry Association and the New Jersey Chamber of Commerce oppose the bill but did not testify during Monday’s hearing.

Representatives of the Main Street Alliance, a progressive small business organization, voiced support for the measure, saying it would help level the playing field between small and large businesses.

“My employees, I want to be able to retain them and compete with larger employers,” said James Parker, owner of Riverview Studios in Bordentown City and a member of the alliance. “It makes a lot of sense this bill.”

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