New Jersey lawmakers are reviewing a bill on Monday that aims to set up a state-managed retirement account for private-sector workers who do not have access to a retirement plan.
The plan – called the New Jersey Secure Choice Savings Program Fund – closely resembled plans set up in other states in recent years, such as California, Maryland and Illinois.
More details from NJ Spotlight:
Under the bill, companies with more than 25 employees would be required to set up an automatic payroll deduction into the retirement plan for employees who wish to participate in it. Companies would not be required to contribute any matching funds.
Businesses with fewer than 25 employees that do not offer a retirement plan would be encouraged to offer the payroll deduction, but would not be required to do so.
A seven-member, volunteer board would be formed to administer the fund. The board would be responsible for designing and implementing the retirement plan, including selecting a trustee, determining appropriate risk management, and hiring staff or entering into contracts for administering the retirement plan.
Private-sector employees would be allowed to pick from a series of investment options and set their own contribution level, with the default being 3 percent of wages. Employees could also opt out altogether, and state employees would not be allowed to participate.
To shield the state from liability, protections would be put in place to ensure all risk would be assumed by any entities the board would contract with to administer the retirement system. Penalties would also be established for any employer that does not facilitate their employees’ enrollment in the retirement plan if the employees don’t elect to opt out.
Employers wouldn’t be forced to match employee contributions.
Read the bill here.
Photo by TaxCredits.net
