New Jersey lawmakers are considering a measure that would help more workers save money for retirement.
The Secure Choice program would require companies with 25 or more employees to allow workers to have up to 3 percent of their income deducted for investment in retirement savings plans overseen by the state.
More than half of New Jersey private-sector workers do not have access to a workplace plan to save money for retirement, said Ann Vardeman with New Jersey Citizen Action.
“With all the other financial pressures facing working New Jerseyans, we need a simple structure that takes the guesswork out of saving for retirement,” she said. “The creation of an automatic, portable, and secure way to save the money they earn will help keep seniors from living in poverty.”
Molly Sumner, who owns a dog-training and pet-care business in Frenchtown, said Secure Choice would be a dream come true.
“Because it is a state-sponsored plan for employees only, there is no financial responsibility or liability for the employers like me or the state of New Jersey,” she said Monday during a hearing on the measure. “There is no cost to the taxpayer. Costs would be covered by the plans’ investors, employees like mine.”
Frank Robinson with the New Jersey Business and Industry Association, However, said it would be better if employer participation in the plan were voluntary.
“We’re just concerned that this is just another mandate that, in fact, is going to cost employers money to set up these plans,” Robinson said. “So if we made it voluntary, they can set up a program with their employees if they feel they can afford it.”
Sarah Gill with AARP says the plan could help the state save money by reducing spending on Medicaid programs.
“Eighteen percent of people are retiring in debt with zero assets,” Gill said. “So it’s pretty low bar to be able to move it up and reduce the number of retirees that are in poverty.”
AARP says the measure would benefit 1.7 million people in New Jersey who don’t have a workplace plan to save for retirement.
David Pascrell, who represents the American Council of Life Insurers, urged lawmakers to delay enacting the measure until the federal government clarifies how the Employer Retirement Income Security Act would affect it.
“It’s a question related to whether or not employers will have liability should there be losses, should the state have liability should there be losses as a result of this,” he said.