New Jersey is the latest to adopt a state-run retirement plan for private businesses. However, in a compromise between Democratic lawmakers and Gov. Chris Christie, the bill only establishes a state-sponsored marketplace to encourage participation, rather than requiring businesses with a certain number of employees to offer the plans. Christie signed “New Jersey Small Business Retirement Marketplace Act” into law on Tuesday.
The bill’s sponsors said was necessary to take action because of the Garden State’s retirement savings gap, because one in six Americans retire in poverty, and employees who are unable to “effectively build their retirement savings risk living on low incomes in their elderly years and are more likely to become dependent on state services.”
“The New Jersey Small Business Retirement Marketplace will remove the barriers to entry into the retirement market for small businesses by educating small employers on plan availability and promoting, without mandating participation, qualified, low cost, low burden retirement savings vehicles and myRA; the marketplace furthers greater retirement plan access for the residents of New Jersey while ensuring that individuals participating in these retirement plans will have all the protections offered by federal law.”
The bill cites a recent AARP poll, which found 86 percent of New Jersey residents age 35 and older say they hope to retire one day, but 65 percent are anxious about saving enough money so they could afford it, and AARP estimates that roughly 1.7 million private sector workers in New Jersey do not have access to a retirement savings plan through their employer, and the National Institute of Retirement Security describes this as a growing consumer crisis, because the typical family has saved only $2,500 for their retirement.