The New Jersey Senate approved a bill that would let the state create a retirement savings program for certain private-sector workers whose employers don't offer a retirement plan.
The bill, approved Thursday by a 29-6 vote, is similar to one approved Dec. 17 by the General Assembly by a 53-24 vote. The general theme of the bills is the same. However, the Senate bill contains a dozen amendments related primarily to program administration. The General Assembly is scheduled to vote on the Senate version on Feb. 25. If the General Assembly concurs, the legislation will be sent to Gov. Phil Murphy.
The Senate bill authorizes IRAs that feature automatic enrollment and payroll deduction for employees who can opt out of the program. Employers are not fiduciaries for this program.
The bill creates the New Jersey Secure Choice Savings Program Fund, which will be financed by participants in the program and will not depend on state aid except for startup and administrative costs.
It also creates the New Jersey Secure Choice Savings Board to manage the program and oversee the fund.
Eligible employees may select a contribution level. If they don't, the default contribution rate will be 3% of annual wages, the bill said.
The bill has different requirements for employers with 25 or more employees vs. those with fewer than 25 employees.
For the former, employers "will provide payroll deduction retirement savings arrangements for each of its employees and deposit, on behalf of its employees, these funds into the program," said an explanatory document accompanying the bill. The latter group "may, but are not required to, provide payroll deduction retirement savings arrangements for each employee who elects to participate in the program."
Employees may select an investment option from the choices provided by the New Jersey Secure Choice Savings Board. "If an employee fails to select an investment option, that employee's contributions shall be placed in the default investment option selected by the board," the document said.