Currently, an estimated 1.7 million people in New Jersey work for companies that do not offer any type of retirement savings plan.
Private sector businesses with 25 or more employees will now be required to set up a retirement savings program if they don’t already offer one, under a new law signed by Gov. Phil Murphy, called the New Jersey Secure Choice Savings Program Act.
“We’re facing a retirement crisis,” said Murphy at Thursday’s bill signing event. “This crisis was put into stark relief by research released on Tuesday by the Government Accountability Office. Their data shows that 48 percent of Americans aged 55 and over had nothing put away in either a 401(k) or individual retirement account. The fact is more and more New Jerseyans are facing the prospect of retirement without adequate savings to ensure dignity throughout their retirements.”
Under the new law, employees will be automatically enrolled in the program to contribute 3 percent of their paycheck, pretax, unless they opt out.
The program will be overseen by a board appointed by the governor’s administration and legislative leaders, but managed by a private investment firm.
The board has two years to set up guidelines and the process by which businesses will participate. If needed, the board can apply for a one-year extension. Once the program is established, companies will have nine months to comply.