New York Governor Kathy Hochul on Thursday signed a law guaranteeing and requiring pension plan options for private sector employees.
House Bill A3213A requires private sector employers of 10 or more people who do not provide their employees with a retirement savings plan to automatically enroll them in the state’s Secure Choice savings plan from New York.
The Secure Choice Savings Plan which was established in 2018 is “a self-sustaining retirement savings program in the form of an automatic enrollment payroll deduction IRA.” The program – in which enrollment was previously entirely optional – is overseen by the New York State Secure Choice Savings Board of Directors, which is made up of nine appointed members.
The Ministry of Taxation and Finance will oversee development and implementation “as the board sees fit”.
Employees can opt out of the program at any time.
This legislation is expected to affect 2.5 million private sector employees in New York City who do not benefit from retirement savings plans in the course of their work.
“Part of ensuring financial stability for New Yorkers is ensuring they have a reliable retirement plan,” Hochul said in a statement. “This legislation gives all workers a sense of relief and security when it comes to retiring.”
Eddie Kizenberger Jr., executive director of the Long Island Auto Body Repairmen’s Association for 11 years, strongly disagreed with the decision.
While Kizenberger said he “understands where this is coming from” and that “obviously employee pension benefits are very important”, he referred to the current financial problems – mainly a shortage of parts and workers. resulting in much longer storage and repair times – body shops are faced with this.
“This only adds another level of difficulty for the accident repair industry,” Kizenberger said. “New York has been one of the most hostile states in the country for small business,” and he sees that as an example of that.
If you think this is just a New York requirement that doesn’t matter because you live far away, think again.
It could strike near you very soon if it hasn’t already. Some 28 states have passed similar legislation or are considering adopting it, according to the Pension Rights Center.
“Companies offer retirement plans for different reasons,” said Scott Broaddus, Chartered Financial Planner, Chartered Investment Trustee, Equity Partner at Irongate Capital Advisors and Investment Advisor for the Society’s 401 (k) program. Collision Repair Specialists (CSRS). “Some may use the game as a form of employee profit sharing. Others believe it is necessary to recruit the best talent.
“But now some states are getting involved and passing legislation that will require companies to offer a pension plan. With 25% of the workforce planning to retire in the next 10 years, I think this will be a major focal point for states. “
According to a Collision Repair Education Foundation survey of more than 675 stores, just over 50% of store owners offer retirement savings benefits. This continues a decline that started in 2013.
The CSIS multi-employer plan – which pools the resources and power of collective members – may be the solution.
“I work with nonprofit organizations and associations across the country that administer pension plans for employees and their members,” said Broaddus. “Before deciding to offer a retirement solution to their members, CSIS spent 18 months learning about everything from plan design to providers and options that already exist.
“They ultimately chose a bespoke plan for their members, hired the vendors, and negotiated prices in advance that go down for all participants as the plan grows. CSIS Executive Director Aaron Schulenburg and the Investment Committee have been incredible supporters of the participants in this plan.
For more information on the SCRS MEP, please see: Now is the time to explore the CSRS 401 (k) plan! – Society of Collision Repair Specialists
The New York requirement has been in the works since May 11, when the state’s General Assembly voted in favor, 125-22. On June 7, the state Senate voted 44-19 to approve.
“Governor Hochul is enabling millions of working New Yorkers to save for a financially secure and independent retirement, while providing small businesses with an effective way to attract and retain employees,” said Beth Finkel, director of AARP for New York State. “AARP congratulates the Governor for enacting this bill and we thank them for their support of Secure Choice since prior to its enactment in 2018.”
On August 9, New York City approved something similar – the universal retirement security laws – for private sector companies that employ five or more people.
Employers who do not offer a retirement plan will have to automatically enroll their employees who are at least 21 years old and work at least 20 hours per week in the city’s savings plan.
This program has not yet been implemented as the city’s Retirement Savings Board has two years to formalize the details of the program and set a start date.
Featured: New York Governor Kathy Hochul (governor.ny.gov)
Other images: Statue of Liberty, New York City (spyarm / iStock)
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