Bill Text: NJ A1341 | 2016-2017 | Regular Session | Introduced
Bill Title: "New Jersey Small Business Retirement Marketplace Act."
Spectrum: Partisan Bill (Republican 5-0)
Status: (Introduced - Dead) 2016-01-27 - Introduced, Referred to Assembly Labor Committee [A1341 Detail]
Download: New_Jersey-2016-A1341-Introduced.html
STATE OF NEW JERSEY
217th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2016 SESSION
Sponsored by:
Assemblyman DAVID P. RIBLE
District 30 (Monmouth and Ocean)
Assemblyman SEAN T. KEAN
District 30 (Monmouth and Ocean)
Assemblywoman NANCY F. MUNOZ
District 21 (Morris, Somerset and Union)
Co-Sponsored by:
Assemblyman O'Scanlon
SYNOPSIS
"New Jersey Small Business Retirement Marketplace Act."
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act establishing a retirement savings marketplace and supplementing Title 43 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "New Jersey Small Business Retirement Marketplace Act."
2. The Legislature finds and declares that:
a. it is appropriate to create a New Jersey Small Business Retirement Marketplace because there is a retirement savings gap in this State, one in six Americans retire in poverty, and employees who are unable to effectively build their retirement savings risk living on low incomes in their elderly years and are more likely to become dependent on State services;
b. small businesses, which employ half of New Jersey's private workforce, often choose not to offer retirement plans to employees due to concerns about the cost, administrative burden, and potential liability that they believe would be placed on their businesses;
c. the federal government has attempted to address this savings gap by establishing the myRA program, a safe, affordable, and accessible retirement vehicle designed to remove barriers to retirement savings;
d. the New Jersey Small Business Retirement Marketplace will remove the barriers to entry into the retirement market for small businesses by educating small employers on plan availability and promoting, without mandated participation, qualified, low cost, low burden retirement savings vehicles and myRA; the marketplace furthers greater retirement plan access for the residents of New Jersey while ensuring that individuals participating in these retirement plans will have all the protections offered by federal law;
e. the New Jersey Small Business Retirement Marketplace should not place any financial burden upon taxpayers in the State and it should not be implemented if it is determined that there is any financial exposure to the State;
f. the New Jersey Small Business Retirement Marketplace will be the best way for New Jersey to close the retirement savings access gap, protect the fiscal stability of the State and its citizens well into the future, become a national leader in retirement and investor promotion and protection, and educate and promote retirement saving among employees and small employers;
g. according to a recent AARP poll, 86 percent of New Jersey residents age 35 and older say they hope to retire one day, but 65 percent are anxious about saving enough money so they could afford it and AARP estimates that roughly 1.7 million private sector workers in New Jersey do not have access to a retirement savings plan through their employer, and the National Institute of Retirement Security describes this as a growing consumer crisis, because the typical family has saved only $2,500 for their retirement;
h. AARP has been instrumental in leading a national initiative called Work and Save to deal with retirement insecurity by creating state run retirement programs, including the Washington Small Business Retirement Marketplace, signed into law in May 2015, designed to provide thousands of small business employees the access to retirement plans by creating a voluntary public-private partnership marketplace that will educate small business employers to existing private sector retirement plan vendors;
i. the Washington marketplace was the result of public and private organizations coming together to find the most effective and efficient way to close the retirement savings access gap, and the following organizations have endorsed the Washington marketplace: AARP, Securities Industry and Financial Markets Association, the American Council of Life Insurers, Washington Bankers Association, and various employer groups; and
j. by following this model, the New Jersey Small Business Retirement Marketplace will provide a market-based approach so that small businesses can offer a simple and inexpensive way to offer private savings to their employees, which will result in workers saving more for retirement throughout their lives.
3. As used in this act:
"Approved plans" means retirement plans offered by private sector financial services firms that meet the requirements of this act to participate in the marketplace.
"Balanced fund" means a mutual fund that has an investment mandate to balance its portfolio holdings and generally includes a mix of stocks and bonds in varying proportions according to the fund's investment outlook.
"Board" means the board of directors of the marketplace.
"Division" means the Division of Investment in the Department of the Treasury.
"Eligible employer" means a person, firm, corporation, partnership, or sole proprietor, or any other employer that is actively engaged in business with fewer than 100 qualified employees at the time of enrollment, and a majority of which employees are employed in New Jersey.
"Enrollee" means any employee who is voluntarily enrolled in an approved plan offered by an eligible employer through the marketplace.
"Executive director" means the executive director of the marketplace.
"myRA" means the myRA retirement program administered by the United States Department of the Treasury that is available to all employers and employees with no fees or no minimum contribution requirements. "myRA" is a Roth IRA option and investments in these accounts are backed by the United States Department of the Treasury.
"New Jersey Small Business Retirement Marketplace" or "marketplace" means the retirement savings program created to connect eligible employers and their employees with approved plans to increase retirement savings.
"Participating employer" means any eligible employer with employees enrolled in an approved plan offered through the New Jersey Small Business Retirement Marketplace who chooses to participate in the marketplace and offers approved plans to employees for voluntary enrollment.
"Private sector financial services firms" or "financial services firms" mean persons or entities licensed or holding a certificate of authority or authorized to do business in the State, in good standing by the Department of Banking and Insurance and the Bureau of Securities in the Division of Consumer Affairs in the Department of Law and Public Safety, and meeting all federal laws and regulations to offer retirement plans.
"Qualified employee" means those workers who are defined by the federal Internal Revenue Service to be eligible to participate in a specific qualified plan.
"Target date or other similar fund" means a hybrid mutual fund that automatically resets the asset mix of stocks, bonds, and cash equivalents in its portfolio according to a selected time frame that is appropriate for a particular investor and is structured to address a projected retirement date.
4. There is established the New Jersey Small Business Retirement Marketplace, allocated within the Division of Investment in the Department of the Treasury; but, notwithstanding that allocation, the marketplace shall be independent of any supervision or control of the division or by any board or officer thereof.
5. a. The marketplace shall be governed by a board of directors consisting of 10 members as follows:
(1) the Director of the Division of Investment of the Department of the Treasury, or the director's designee, as a nonvoting, ex officio member;
(2) the Commissioner of Banking and Insurance, or the commissioner's designee, as a nonvoting, ex officio member;
(3) the Chairperson of the State Investment Council, as a nonvoting, ex officio member; and
(4) seven public members who are residents of this State, to be appointed by the Governor with the advice and consent of the Senate, including: one person who shall be a member in good standing of the American Academy of Actuaries; and four other persons, two of whom shall be appointed upon the recommendation of the President of the Senate, and two of whom shall be appointed upon the recommendation of the Speaker of the General Assembly.
b. Each public member of the board shall have demonstrated their qualification for appointment by training, experience, or long-term interest in the direct management, analysis, supervision, or investment of assets, and this training, experience, or long-term interest shall have been supplemented by academic training in the fields of economics, business, law, finance, or actuarial science or by actual employment in those fields.
c. The public members shall serve without compensation, but shall be reimbursed for any expenses incurred by them in the performance of their duties, subject to the limits of funds appropriated or otherwise made available for this purpose.
d. The public members of the board shall serve for a term of four years; except that with respect to the first term of the members first appointed, one of the public members appointed upon the recommendation of the President of the Senate, one of the public members appointed upon the recommendation of the Speaker of the General Assembly, and one additional public member shall each serve for a period of three years, one of the public members appointed upon the recommendation of the President of the Senate, one of the public members appointed upon the recommendation of the Speaker of the General Assembly, and one additional public member shall each serve for a period of four years, and the other public member appointed shall serve for a period of five years.
e. Each public member of the board shall hold office for the term of the appointment and until a successor has been appointed. Vacancies shall be filled in the same manner as the original appointments were made. A member is eligible for reappointment.
f. The board shall organize as soon as practicable after the appointment of its members and shall select a chairperson annually from among its members.
g. (1) The board shall appoint an executive director of the marketplace to supervise the administrative affairs and general management and operations of the marketplace.
(2) The executive director shall:
(a) be a person qualified by training and experience to perform the duties of that position;
(b) serve as a member of the senior executive or unclassified service and be appointed without regard to the provisions of Title 11A of the New Jersey Statutes;
(c) attend all meetings of the board; and
(d) serve at the pleasure of the board, and receive such compensation as the board shall determine, which shall not exceed the compensation of a cabinet-level official of the State.
(3) With the approval of the board, the executive director shall:
(a) plan, direct, coordinate, and execute the administrative functions of the marketplace in conformity with the policies and directives of the board;
(b) employ staff as necessary to implement the provisions of this act;
(c) report to the board on all operations under the control and supervision of the executive director; and
(d) undertake any other activities necessary to accomplish the purposes of the marketplace.
6. a. The board shall design and implement a plan for the operation of the marketplace pursuant to the provisions of this act. The board shall facilitate the connections between eligible employers and approved plans included in the marketplace.
b. The board shall approve for participation in the marketplace all private sector financial services firms as defined in section 3 of this act. The board shall ensure that a range of investment options are provided by the financial services firms to meet the needs of investors with various levels of risk tolerance and various ages.
c. The board shall approve a diverse array of private retirement plan options that are available to employers on a voluntary basis, including life insurance plans that are designed for retirement purposes, and at least two types of plans for eligible employer participation, including:
(1) a SIMPLE IRA type plan that provides for employer contributions to participating enrollee accounts; and
(2) a payroll deduction individual retirement account type plan or workplace-based individual retirement accounts open to all workers in which the employer does not contribute to the employees' account.
d. Prior to approving a plan to be offered on the marketplace, the board shall obtain certification from the Department of Banking and Insurance and the Bureau of Securities in the Division of Consumer Affairs in the Department of Law and Public Safety that the financial services firm providing the plan is in good standing with the department and the bureau and that the plan meets the requirements of this act. The board may remove any approved plan from the marketplace that no longer meets the requirements of this act.
e. The financial services firms participating in the marketplace shall offer a minimum of two product options, including:
(1) a target date or other similar fund, with asset allocations and maturities designed to coincide with the expected date of retirement; and
(2) a balanced fund.
The marketplace shall offer myRA in addition to any other approved plan.
f. The marketplace shall not operate unless there are at least two financial services firms offering approved plans on the marketplace; however, nothing in this section shall be construed as to limit the number of financial services firms with approved plans from participating in the marketplace.
g. The board shall ensure that approved plans are compliant with any federal law or regulation regarding Internal Revenue Service approved retirement plans.
h. Approved plans shall include the option for enrollees to roll pretax contributions into a different individual retirement account or another eligible retirement plan after ceasing participation in a plan approved by the marketplace.
i. Financial services firms selected by the board to offer approved plans on the marketplace shall not charge the participating employer an administrative fee or surcharge and shall not charge enrollees more than 100 basis points in total annual fees and shall provide information about their product's historical investment performance.
j. Participation in the marketplace is voluntary for both eligible employers and qualified employees, and enrollment in any approved plan offered in the marketplace is not an entitlement.
k. The board shall establish protocol to address rollovers for eligible employers that have workers in other states, and to address whether out-of-state employees with existing IRAs may roll them into the plans offered through the marketplace.
l. The board shall establish a fee system that charges financial services firms that participate in the marketplace in order to cover the startup and annual administrative expenses of the board in the performance of its duties under this act.
7. a. The board shall contract with a private sector entity to:
(1) establish a protocol for reviewing and approving the qualifications of all financial services firms that meet the requirements to participate in the marketplace;
(2) design and operate an Internet website that includes information about how eligible employers can voluntarily participate in the marketplace;
(3) develop marketing materials about the marketplace that can be distributed electronically or posted on both public and private sector maintained websites;
(4) identify and promote existing federal and State tax credits and benefits for employers and employees that are related to encouraging retirement savings or participating in retirement plans; and
(5) promote the benefits of retirement savings and other information that promotes financial literacy.
b. The board shall direct the private sector entity contracted pursuant to subsection a. of this section to assure that licensed professionals who assist their eligible business clients or employees to enroll in a plan offered through the marketplace will receive routine, market-based commissions or other compensation for their services.
c. The board shall establish objective criteria for the protocol established pursuant to subsection a. of this section to ensure that the protocol does not provide unfair advantage to the private sector entity which establishes the protocol.
8. In addition to any funds appropriated for the purposes of this act, the board shall approve the use of private funding sources, including private foundation grants, to pay for marketplace expenses. On behalf of the board, the executive director shall seek federal and private grants and is authorized to accept any funds awarded to the board for use in designing, implementing, and operating the marketplace.
9. The board shall not expose the State as an employer or through administration of the marketplace to any liability under the federal "Employee Retirement Income Security Act of 1974" (29 U.S.C. s. 1001 et seq.). The board is specifically prohibited from offering and operating a State sponsored retirement plan for businesses or individuals who are not employed by the State, or any political subdivision thereof.
10. The board shall approve incentive payments to participating employers that enroll in the marketplace if there are sufficient funds provided by private foundations or other private sector entities, or with State funds specifically appropriated for this purpose.
11. The board shall submit a report biennially to the Legislature on the effectiveness and efficiency of the marketplace, including levels of enrollment and the retirement savings levels of participating enrollees that are obtained in aggregate on a voluntary basis from private sector financial services firms that participate in the marketplace.
12. The division shall annually, or upon request of the board, review individual retirement account products proposed for inclusion in the marketplace to confirm that the products comply with the requirements of section 5 of this act.
13. The board shall promulgate regulations, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), necessary to effectuate the purposes of this act. In promulgating regulations, the board shall consult with organizations representing eligible employers, qualified employees, private and nonprofit sector retirement plan administrators and providers, private sector financial services firms, and any other individuals or entities that the board determines relevant to the effective and efficient method for effectuating the purposes of this act.
14. This act shall take effect immediately.
STATEMENT
This bill establishes the New Jersey Small Business Retirement Marketplace ("the marketplace") to remove the barriers to entry into the retirement market for small businesses by educating small employers on plan availability and promoting, without mandated participation, qualified, low cost, low burden retirement savings vehicles. The marketplace is allocated within the Division of Investment in the Department of the Treasury, but it is to be independent of any supervision or control by the department or any board or officer thereof.
The marketplace is to be governed by a board of directors charged with developing and implementing the marketplace, consisting of ten members as follows:
-- the Director of the Division of Investment of the Department of the Treasury, or the director's designee, as a nonvoting, ex officio member;
-- the Commissioner of Banking and Insurance, or the commissioner's designee, as a nonvoting, ex officio member;
-- the Chairperson of the State Investment Council, as a nonvoting, ex officio member; and
-- seven public members who are residents of this State, to be appointed by the Governor with the advice and consent of the Senate, including: one person who is a member in good standing of the American Academy of Actuaries; and four other persons, two of whom will be appointed upon the recommendation of the President of the Senate, and two of whom will be appointed upon the recommendation of the Speaker of the General Assembly.
The bill ensures that the public members of the board will be individuals who have demonstrated their qualification for appointment by training, experience, or long-term interest in the direct management, analysis, supervision, or investment of assets, and this training, experience, or long-term interest has been supplemented by academic training in the fields of economics, business, law, finance, or actuarial science or by actual employment in those fields.
The board is directed to appoint an executive director of the marketplace to supervise the administrative affairs and general management and operations of the marketplace. The executive director will serve at the pleasure of the board and receive such compensation as the board determines, which will not exceed the compensation of a cabinet-level official of the State.
The board must design and implement a plan for the operation of the marketplace pursuant to the provisions of the bill, including approval of financial services firms to participate in the marketplace. The board must ensure that a range of investment options are provided by the financial services firms to meet the needs of investors with various levels of risk tolerance and various ages. The board must approve a diverse array of private retirement plan options, including life insurance plans that are designed for retirement purposes, and at least two types of plans for eligible employer participation, including:
(1) a SIMPLE IRA type plan that provides for employer contributions to participating enrollee accounts; and
(2) a payroll deduction individual retirement account type plan or workplace-based individual retirement accounts open to all workers in which the employer does not contribute to the employees' account.
The financial services firms participating in the marketplace must offer a minimum of two product options, including:
(1) a target date or other similar fund, with asset allocations and maturities designed to coincide with the expected date of retirement; and
(2) a balanced fund.
The marketplace must offer the federal myRA in addition to any other approved plan.
The board will ensure that approved plans are compliant with any federal law or regulation regarding Internal Revenue Service approved retirement plans. The bill stipulates that financial services firms selected by the board to offer approved plans on the marketplace will not charge the participating employer an administrative fee or surcharge and will not charge enrollees more than 100 basis points in total annual fees and must provide information about their product's historical investment performance. Participation in the marketplace is voluntary for both eligible employers and qualified employees, and enrollment in any approved plan offered in the marketplace is not an entitlement.
The board is directed to contract with a private sector entity to establish a protocol for reviewing and approving the qualifications of all financial services firms that meet the requirements to participate in the marketplace, design and operate an Internet website that includes information on employer participation in the marketplace, develop marketing materials about the marketplace, identify and promote existing federal and State tax credits and benefits that are related to encouraging retirement savings, and promote the benefits of retirement savings and other information that promotes financial literacy.
In addition to any funds that may be appropriated for the purposes of the bill, the board must approve the use of private funding sources, including private foundation grants, to pay for marketplace expenses. The board is prohibited from exposing the State as an employer, or through administration of the marketplace, to any liability under the federal "Employee Retirement Income Security Act of 1974" (29 U.S.C. s. 1001 et seq.). The board is also specifically prohibited from offering and operating a State sponsored retirement plan for businesses or individuals who are not employed by the State, or any political subdivision thereof.
The bill permits the board to approve incentive payments to participating employers that enroll in the marketplace if there are sufficient funds provided by private foundations or other private sector entities, or with State funds specifically appropriated for this purpose.
Finally, the bill provides that the board must submit a report biennially to the Legislature on the effectiveness and efficiency of the marketplace, including levels of enrollment and the retirement savings levels of participating enrollees that are obtained in aggregate on a voluntary basis from private sector financial services firms that participate in the marketplace.
