M E M O R A N D U M
Members of the Assembly Financial Institutions and Insurance Committee
: Christina M. Renna, Vice President
RE: A-4134 (Freiman/Mukherji)
DATE: October 15, 2018
The Chamber of Commerce Southern New Jersey would like to express our concerns with A-4134 (Freiman/Mukherji), which would create the “New Jersey Secure Choice Savings Program Act.”
This act would establish a retirement savings program for private sector workers in the form of an automatic enrollment payroll deduction of six percent (up from three percent – a 100 percent increase – from the original version of this legislation) into an Individual Retirement Account (IRA) for employers with more than 25 employees. As written, a newly created, state-run “New Jersey Secure Choice Savings Board” would implement the program and oversee the fund, as opposed to being subject to the open market. Though studies consistently reflect that a majority of Americans are not saving enough toward their retirement, we do not agree that employers should be mandated to participate, nor that employees should be automatically enrolled in such a savings program. Our concerns with A-4134 (Freiman/Mukherji) include:
- Employer participation in the program should be voluntary; this bill imposes yet another mandate on employers at a time New Jersey businesses are adapting to and complying with other mandates, including paid “sick” leave and equal pay. Despite what proponents claim this bill will add to the cost of doing business in New Jersey
- Participation in any retirement plan should be the choice of employees; therefore, they should choose to opt-in – not opt-out – of participation. If the percentage of their salary they wish to save toward retirement is intended to be their choice, there is little reason for such a high default six percent contribution rate contained in the bill, especially seeing employees will be automatically enrolled.
- We believe it is not the government’s role to manage retirement plans of private sector employees. In fact, there is abundant choice of retirement vehicles and investment models that are customized to the needs of the employee. The licensed brokers of these companies possess the expertise needed to advise employers and employees on all available options, dependent upon the individual’s savings and retirement goals, including their tax implications.
- The administrative costs of implementing the program -- writing, designing and printing educational materials, and employing expert customer service representatives to respond employee questions about the fund, among others – will impact upon investment returns and that amount should be disclosed to those investing.
While we appreciate the goals of this legislation, we believe the understanding of the need to save and choosing the right retirement vehicle is a matter of personal responsibility. AARP does an excellent job educating its members and the general public on the need for retirement savings, and should continue its campaign to do so without this unnecessary employer mandate.
Thank you for the opportunity to express our concerns regarding A-4134 (Freiman/Mukherji).