Your employer must offer a pension plan

Do you find it impossible to save for retirement? You may soon have a new option.

Signed by Governor Phil Murphy in 2019, legislation that will take effect in March requires employers to get the ball rolling by offering a retirement savings plan to their employees.

Typically a benefit offered by large companies, a pension plan will be required of employers who have been in business for at least two years and have 25 or more workers, by law. The initial implementation of the law was pushed back a year, to March 28, 2022, due to the coronavirus pandemic.

So eligible companies that don’t yet offer a program like 401(k) must choose whether they want to follow the state-sponsored program created by law, or another plan, and offer their employees a benefit that must include automatic payroll deduction.

Through the state-sponsored plan, employee funds would be diverted to an Individual Retirement Account (IRA). The standard deduction for participating employees would be 3%, but workers can change the amount.

“We’ve seen that people are much more likely to save for retirement if they can do it as part of a work plan,” said Eric Phillps, senior director at Human Interest, a health benefits provider. retirement for small and medium enterprises.

Noting that most of the U.S. workforce is employed in a small workforce, Phillips cited a “growing crisis” related to retirement savings — one the New Jersey law aims to address. .

New Jersey is one of more than a dozen states with a law that mandates some type of retirement plan. Dozens more have programs under consideration.

“There’s a national view on this situation and everyone is trying to do something about it, which I think is really great,” Phillips said.

Dino Flammia is a reporter for New Jersey 101.5. You can reach him at [email protected]

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