New Jersey has officially launched a new state-run retirement savings program called RetireReady NJ. The program is designed to help private-sector workers who do not have access to retirement plans through their employers. Under the new program, businesses with 25 or more employees operating for at least two years must participate.
However, employers already offering a qualified retirement plan are exempt from the mandate. Participating company employees will be automatically enrolled in the program and can save for retirement through payroll deductions. Contributions will be made to a Roth or Traditional Individual Retirement Account (IRA).
The default contribution rate is set at 3% of an employee’s pay. If no specific investment choices are made, contributions will initially go into a capital preservation fund for 30 days before being transferred to a target-date fund.
New state retirement options
Employees also have the option to customize their investments from a selection of fund options. “Every worker in New Jersey deserves to retire with dignity and financial security,” said Governor Phil Murphy. “By launching the RetireReady NJ initiative, we are one step closer to making that a reality.”
According to AARP, an estimated 1.7 million New Jersey residents work for companies that do not provide retirement benefits.
The state expects the RetireReady NJ fund to eventually surpass $10 billion in assets once fully implemented. To test the system, a pilot program involving five New Jersey employers and 250 workers was conducted earlier this year. The program is now being expanded to include all qualifying businesses across the state.
RetireReady NJ will notify employers when it is their turn to register for the program. New Jersey joins several other states, including California, Illinois, and Oregon, that have launched similar state-sponsored retirement savings plans in recent years. The goal is to help more Americans save for a financially secure retirement, especially those without access to employer-sponsored plans.
