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Creative writing class led by a 96 year old teacher in Teaneck
Seniors in Teaneck in a creative writing class led by a 96 year old retired English teacher at Arbor Terrace
Chris Pedota, NorthJersey.com
More than five years after New Jersey promised to expand retirement benefits to thousands of Garden State workers, the program is finally seeing movement and a set timeline.
On Tuesday, retirement planning firm Vestwell was tapped as the program administrator for the New Jersey Secure Choice Savings Program, which is supposed to make IRA-type retirement funds available to state residents who work at private businesses with 25 or more workers.
A lot of small business workers don’t have access to retirement savings accounts, said Todd Hassler, executive director of the program. “It’s often referred to as a retirement gap crisis.”
The state missed the law’s original starting date of March 28, 2021, citing the pandemic for the delay. Another March deadline came and went in 2022.
Vestwell will start with a pilot program in 2024, followed by a phased, targeted launch in the middle of that year, according to Doug Magnolia, president of Vestwell State Savings.
Its management entails “recordkeeping, custodial services and customer support,” reads the announcement.
The program is using Ice Miller as special tax counsel and Marketsmith for marketing, the latter at a cost of $550,000 for a two-year period, Hassler said. Vestwell’s cost depends on “performance breaks that we get based on accounts that are established,” he added.
“This is a complex program with long term implications for many thousands of the state’s employees and myriad small businesses,” said Eli Fried, a financial advisor with Leatherback Investments, who spoke at program board meetings.
“Getting it right is more important than just getting it fast,” he continued in an email. “The program needs to balance ease of use, cost to employees and the potential burden on already overwhelmed business owners.”
How does the NJ state retirement program work?
Under Secure Choice Savings, the state would set up its own retirement fund and automatically enroll employees at businesses that are more than two years old, have at least 25 staff members and don’t offer their own benefits.
Deductions would be set at 3% of employee pay. No contributions would come from employers — a restriction put in place to keep the program in line with federal regulations.
AARP, the advocacy group for older Americans, previously estimated that year that more than 1.7 million people in the Garden State were employed by businesses that didn’t offer such benefits.
“It’s going to take some time both to roll out the program and receive adoption from all the employers and employees,” Hassler said, none of whom are “being asked to take on a heavy lift” since their payroll work is already done by outside firms. Education is a key component, he added.
Vestwell estimated that at least 800,000 New Jerseyans would have access to retirement thanks to the Secure Choice Savings Program.
Do other states have retirement programs?
California, Illinois and Oregon have similar programs on which New Jersey’s was modeled, and New York enacted its own version in 2021.
According to a database run by Georgetown University, there were nearly 95,000 California employees added by the end of 2022, over 7,200 Illinois employees and over 16,000 Oregon employees added to the program.
That equates to 0.11% of the nearly 6.2 million people working in Illinois, 0.48% of the 18.5 million people employed in California and 0.77% of nearly 2.2 million people working in Oregon.
Based on those states, New Jersey could see anywhere from 5,100 to less than 38,000 enrollees in the program. Hassler said the program is targeting 39,000 employers.
“Each state has slightly different legislation that guides eligibility and other program requirements, which can impact the total population that could be subject to the program rules,” Magnolia said in an email. “Still, the goal is to get as many people saving for their retirement as possible.”
What’s next for the NJ state retirement program?
One key task, getting an executive director for the program: Hassler was announced last December after a “nationwide search,” according to an announcement from the state Treasury Department. He earns an annual salary of $220,000, according to public records.
The Murphy administration estimated that the fund could be over $10 billion in assets once it’s fully up and running. As of Aug. 31, 2023, the California fund had just over $615 million in assets, according to the Georgetown database.
“We are moving at a measured and prudent pace,” Hassler said. “We want to get the program up and running… to a goal of normalization, we’re not going to be in implementation forever. This should become a normal feature for the state employers who don’t have a private pension program.”
Daniel Munoz covers business, consumer affairs, labor and the economy for NorthJersey.com and The Record.
Email: munozd@northjersey.com; Twitter:@danielmunoz100
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