Secure Choice Act offers workers a convenient, low-cost savings plan
TRENTON, NJ – Consumer Reports applauded Governor Phil Murphy today for signing the New Jersey Secure Choice Savings Program Act into law. The new law aims to encourage New Jersey workers to save for retirement by creating a state-facilitated program for private sector workers who don’t already have access to a retirement savings plan through their job.
“Most New Jersey private sector workers currently have no way to save for retirement through their employer, making it more challenging for them to prepare for the future,” said Chuck Bell, programs director for the advocacy division of Consumer Reports. “The Secure Choice Act is a smart, sensible initiative that will help New Jersey workers save so they can retire with greater peace of mind and economic security. We applaud Governor Murphy and New Jersey lawmakers for creating this innovative retirement savings program.”
Over 1.7 million private sector workers in New Jersey have no access to a retirement savings account through their employer. Research has shown that workers are 15 times more likely to save for retirement if their employer offers a savings plan. Only five percent of workers without an employer-sponsored savings plan report that they are able to save on a consistent basis for retirement.
Under New Jersey’s Secure Choice program, workers in small companies without employer-sponsored retirement plans would be given the opportunity to save their own wages through a simple, automatic payroll deduction. Workers would be automatically enrolled with a three percent payroll deduction for each paycheck and would have the ability to increase or decrease the contributions or opt out of the program if they wish.
Six other states – California, Connecticut, Illinois, Maryland, New York, and Oregon – have all adopted Secure Choice programs featuring an auto-IRA model. While most of the programs are new and still being implemented, Oregon’s program is now operating. In 2018, 22,000 workers participated in Oregon’s program, saving a total of $10,000,000, with an average savings rate of five percent per paycheck. Sixty-two percent of those eligible to participate were doing so, while 29 percent had formally opted out, which is similar to opt-out rates for private 401(k) programs.
Michael McCauley, firstname.lastname@example.org, 415-902-9537 (cell) or 415-431-6747, ext. 7606