A retirement savings plan for New York’s private-sector employees who don’t have one at work will begin in about two years, officials said.
During the weekend, Gov. Andrew M. Cuomo signed a 2018-19 budget bill that includes the Secure Choice Savings Program for employees of small businesses, independent contractors and freelancers.
The program, proposed by Cuomo in January, is voluntary for private-sector employers. If employers opt in, their workers will be enrolled unless they opt out individually.
The owners of Little Bird Kitchen in Plainview have said they would sign up for the state-organized retirement program because they can’t afford to offer one to their five employees.
The manufacturer of candy and snacks with spicy jalapeño powder has sales of about $250,000 a year.
“This program will help our employees, and it will help us to hire and retain employees,” Little Bird co-owner Corey Meyer said last month.
Under the new law, workers will save through payroll deductions up to the annual limits set for Roth individual retirement accounts. The 2018 limits are $5,500 for workers younger than 50 and $6,500 for those 50 and older.
Employers won’t be allowed to match employee contributions; their only cost will be the administrative cost of setting up payroll deductions.
The savings plan will be overseen by a new state board made up of seven volunteers appointed by Cuomo, the State Legislature and state comptroller. The board will hire a financial services company to run the plan.
Cuomo said Monday: “For years, we have been working to develop and pass a retirement program that would give millions of New Yorkers the opportunity to save for their futures. In this year’s budget we proposed and passed a common-sense, progressive reform that will strengthen our workforce.”
Albany leaders agree on $168 billion budgetThe budget also will include about $1 billion more dollars in school aid statewide, or about a 4 percent increase.
Past proposals stalled in the legislature because employer participation was mandatory. The new law makes participation by employers voluntary.
Cuomo and lawmakers are responding to the high number of private-sector workers without a retirement plan on the job — 4.3 million statewide, or 54 percent of all workers, according to a December report by the New School for Social Research in Manhattan.
New York is among 40 states taking steps to address the increased number of employees without a 401(k), defined benefit pension or other retirement plan on the job.
AARP New York, which lobbies on behalf of people age 50 and older, led the campaign for the retirement savings program. The group’s state director Beth Finkel said, “Secure Choice will offer hardworking men and women across New York an easy and effective way to save for their futures through payroll deduction.”