Burlington County Times

NJ Lawmakers Advance Retirement Account Bill During Lame Duck

Burlington County Times — Tuesday, November 10, 2015

By David Levinsky, Staff writer

TRENTON — New Jersey lawmakers returned to the Statehouse on Monday for the busy kickoff to the Legislature's lame-duck session.

The day featured 13 committee hearings with discussion and votes on dozens of bills ranging from a measure to designate the striped bass the state's official saltwater fish to a bill that would create state-managed retirement savings accounts for many private sector workers whose employers don't offer them pensions or 401(k)s....

Secure Choice Savings Program

Legislation being pushed by AARP to help workers without pensions or 401(k) retirement accounts advanced out of the Assembly Appropriations Committee.

The bill, known as the New Jersey Secure Choice Savings Act, was introduced earlier this year by Senate President Stephen Sweeney, D-3rd of West Deptford, and Assembly Speaker Vincent Prieto, D-32nd of Secaucus.

Under the legislation, employees at companies with more than 25 workers who have not been offered a qualified retirement plan would be enrolled automatically in the state program, which would deduct a percentage of their paychecks to invest in individual retirement accounts.

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

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

AARP and other supporters of the bill say the legislation could help avert a future crisis involving generations of workers retiring without adequate savings.

Nearly 1.8 million private sector workers in New Jersey, or about 53 percent of the private sector workforce, do not have any workplace retirement plans, according to AARP.

Opponents testified at the hearing that they were concerned about upfront and administrative costs to the state. They cited a similar program in Illinois where the costs and upfront expenses were estimated at between $15 million and $20 million over two years.

Supporters countered that those expenses would be repaid with monies collected from workers, and that neither the state nor employers would make contributions to the IRAs.

Over the long term, the state would save on programs such as Medicaid and other government assistance.

"We see this as an anti-poverty program. The upfront costs are well worth the benefits we'll get long term," said Dena Mottola Jaborska, associate director with New Jersey Citizen Action, a government watchdog and reform group.

Business advocates described the program as a government mandate that could increase some administrative costs. They want the program to be optional.

"Making the savings plan a voluntary program would help the business climate and help employees save for retirement," said Mike Wallace, director of employment and labor affairs for the New Jersey Business & Industry Association.

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